Currys PLC announced plans to return £75mln to shareholders over the next 12 months and said it is on track to meet market forecasts for a profit of £161mln in the current year.
The electricals retailer said it decided to return surplus cash to shareholders as its balance sheet position has strengthened significantly in the last three years. It has already delivered £547mln of its £1bn free cash flow target and debt has been reduced by £1bn to £1.5bn.
Currys also provided a trading update which showed 15% growth in like-for-like sales in the first six months of the year compared with two years ago, before the Coronavirs (COVID-19) pandemic struck. Sales fell 1% compared with the first six months of last year.
UK & Ireland like-for-like sales rose 11% compared to two years ago after growth in the Electricals business was offset by an expected decline in Mobile sales. Compared to last year, like-for-like sales were down 3%.
Electricals like-for-like sales soared 21% compared to two years ago and fell 1% on last year. Currys said sales were very strong at the start of the first half on pent-up demand from customers returning to physical stores after the lifting of lockdowns. Growth remained strong through the summer and into the autumn, with physical stores contributing just over half of sales during the period.
The retailer predicted a "robust" peak Christmas trading season and said it has put in place measures to mitigate supply chain issues and labour shortages.
“We believe that these measures combined with our scale, stores and expert colleagues, mean we are on track to meet consensus expectations for full-year 2021/22 PBT of £161mln,” the group said.
It revised down its full-year 2021/22 capital expenditure forecast to £170mln from £190mln previously, while net exceptional cash costs are now estimated to be around £70mln compared with previous guidance of less than £100mln.
Currys expects to finish the year with at least £100mln of net cash.
The group said its medium-term guidance for 4% EBIT margin and over £1bn cumulative free cash flow by 2023/24 remains unchanged. By 2023/24 it expects to be generating over £250mln of annual sustainable free cash flow.
Shares jumped almost 5% to 128.30p in early trade.