Currys PLC (LSE:CURY) shares fell 4.3% to 156.6p despite reporting strong annual results, as concerns over an emerging chip shortage and its impact on electronics prices overshadowed a profit jump and another shareholder payout.
The FTSE 250 retailer reported an 18% rise in adjusted pre-tax profit to £191 million, doubled its dividend and announced a fresh £50 million share buyback.
Peel Hunt analyst John Stevenson described the figures as a "clean handover" as Alex Baldock passes the wheel to incoming chief executive Fredrik Tønnesen, but said the size of the buyback "feels conservative" given the group's £176 million net cash position and expected further strong cash generation.
However, he said the strong balance sheet "brings optionality," adding that the buyback could be "reloaded at the interims".
Investors were also digesting comments from outgoing boss Baldock about an emerging shortage of memory chips.
He told BBC radio that "AI and data centres are eating up the world's supply of silicon", leaving less available for products such as laptops and mobile phones and creating "availability challenges" and "some cost price inflation".
Currys has sought to get ahead of the problem. Stevenson said the retailer had "deliberately loaded up on laptops and computing stock in the face of rising chip prices", with inventories increasing by £140 million to secure current-priced supplies through the back-to-school and autumn trading periods.
The warning comes after Apple recently increased prices on several products. AJ Bell's Dan Coatsworth said that creates "an element of uncertainty in terms of consumer ability or willingness to buy more expensive items".
At the same time, higher prices could be partly offset by a fresh replacement cycle.
Panmure Liberum analysts said Currys has "clear tailwinds" from rising recurring revenues, rapid growth at iD Mobile and demand for AI-enabled devices.
Coatsworth also pointed to England's dramatic World Cup win over DR Congo, noting that "there's nothing like an edge of your seat England game at the World Cup to make people want to upgrade their TV to have a bigger screen".
Electrical retailers have often benefited from major sporting tournaments, and Currys could yet enjoy a boost in television sales after describing that market as "soft" over the past year.
