Currys to confirm dividend and celebrate rejection of cheeky takeover offer

Currys PLC (LSE:CURY) shares have significantly outperformed activist investor Elliott's rejected 67p per share takeover offer, driven by a recent upgrade to financial forecasts and the confirmed resumption of dividends. The electrical retailer projects adjusted pre-tax profit to rise over a third to approximately £162 million for the year to April 2025, supported by 4% like-for-like sales growth in the UK and Ireland. This improved outlook, alongside a strong £180 million net cash position following the £156 million Kotsovolos sale, underpins the dividend return and signals robust financial health and management's confidence in future profit improvements.

Analysis

Currys PLC has effectively validated its rejection of Elliott's 67p per share takeover offer, with its stock price now at its highest since 2021, supported by a significant operational turnaround. The company's upgraded guidance points to a more than one-third increase in adjusted pre-tax profit to approximately £162 million for the year ending April 2025, with further growth projected to £174 million in the subsequent year. This is driven by a 2% group like-for-like sales growth, led by a robust 4% increase in the core UK and Ireland market, which is currently offsetting flat performance in the Nordic region. The balance sheet has been materially strengthened by the £156 million in net proceeds from the sale of its Greek Kotsovolos business, enabling debt reduction and creating a strong net cash position of £180 million. This financial health underpins management's commitment to resuming dividend payments, signaling confidence in sustained free cash flow generation and the ability to manage long-term lease and pension obligations through continued profit improvements.

Key Decisions for Investors

• The strong profit guidance, robust net cash position, and reinstatement of the dividend present a compelling fundamental case, suggesting the recent share price appreciation is well-supported and the outlook remains positive.
• Investors should monitor the performance of the Nordic division, as its flat sales present a drag on group growth and an area for potential operational improvement or risk.
• Given the successful defense against the takeover and subsequent performance, focus should now be on how effectively management can deploy capital and improve profitability to service long-term liabilities like leases and pensions.