Currys PLC (LSE:CURY)’s Nordic market remains “very challenging,” said Liberum, which held its ‘buy’ rating and 135p price target on the house stock.
The electrical goods retailer promoted Fredrik Tønnesen to chief executive from chief operating officer of the Nordics, a move the broker believes marks another step in accelerating plans to restore the Nordic's profit and cash generation.
These include margin improvements, reducing the headcount by between 10% and 15%, lowering marketing spend and promotions, and making savings through optimising the store estate.
Headwinds such as a tough consumer backdrop, high-cost inflation and “unrelenting” competitive intensity continue, but the broker believes there is “good reason” as to why these dynamics should prove temporary.
Long-time Nordic players Komplett and Verkkokauppa both showed in their results that aggressive behaviour from competitors should prove temporary while highlighting their focus on improving profitability.
Komplett also said there are signs of price rises being pushed through to customers, with more normalised promotional levels and margins to come over the next couple of months.
While Nordics has remained challenging for Currys, the UK continues to deliver encouraging results thanks to improving margins and cost-saving measures.
Profit-before-tax guidance for year-end April is at the lower end of the £100mln to £125mln range at £104mln.
Liberum notes, however, that management was clear in the January trading update that the outcome would depend on developments in the Nordics, which have been weaker than anticipated.