Currys shares hit a wall despite return of dividends

Currys PLC (CURY) shares declined 0.85% to 124.2p despite reporting a 37% increase in adjusted profit before tax to approximately £162 million for the year ending May 3, 2025, and the resumption of cash dividends after a suspension in December 2022. The decision to reinstate dividends follows improved free cash flow, driven by lower interest costs and efficient working capital management, resulting in net cash exceeding £180 million at year-end; the market reaction suggests that the positive results were already priced in, following two profit guidance upgrades in recent months.

Analysis

Currys PLC reported a robust financial performance for the year ending May 3, 2025, with adjusted profit before tax swelling by 37% to approximately £162 million, meeting expectations heightened by two recent profit guidance upgrades. This profit growth was supported by a 2% increase in group like-for-like sales over the year, with a notable acceleration to 4% growth in the final 17 weeks, indicating positive momentum in both UK & Ireland and Nordics operations. The company significantly improved its free cash flow, driven by reduced interest costs and disciplined working capital management, resulting in a strong net cash position exceeding £180 million at year-end. Consequently, Currys' board has decided to resume cash dividends, which were suspended in December 2022. Despite these strong results and the positive outlook articulated by CEO Alex Baldock, the shares retreated 0.85% to 124.2p in early trading, pulling back from a three-year high. This market reaction suggests that the positive operational and financial developments, including the 75% share price appreciation over the past 12 months from a multi-year low, may have already been factored into the stock's valuation prior to the announcement.

Key Decisions for Investors

• Consider that the current share price may have already priced in the strong earnings and dividend reinstatement, given the two prior profit upgrades and significant share appreciation over the past year.
• Evaluate the sustainability of the 4% like-for-like sales growth seen in the final 17 weeks, as continued momentum is key to justifying further upside beyond the recent rally.
• The resumption of dividends is a positive signal of financial health and improved cash flow, potentially appealing to income-oriented investors, but the modest market impact suggests closely monitoring future performance against expectations.
• Assess Currys' valuation in light of the 37% profit increase and net cash position, weighing the improved fundamentals against the significant share price recovery from its 2023 lows.