Currys Plc · LSE:CURY
Currys — Investor Day (September 2024)
58 slides from Currys's investor day presentation, Sep 26, 2024
Slide 1: Currys plc Focus on Elkjøp
Currys plc Focus on Elkjøp 26 September 2024
Slide 2: Group Context
Group Context Alex Baldock Group CEO 2
Slide 3: Leading omnichannel retailer of technology products and services
Group context Leading omnichannel retailer of technology products and services We are leaders in some of the world’s largest technology markets Number of households1 28.2m 13.0m Size of market2 £20bn £12bn Online share of market2 63% 35% Revenue £8,476m Year established 1884 1962 Number of Colleague
Slide 4: We help everyone enjoy amazing technology
We help everyone enjoy ~ mazing technology. | a ¥: or a | *
Slide 5: We help everyone enjoy amazing technology
Group context We help everyone enjoy amazing technology Capable and Easy to Customers Grow committed Shop for Life Profits colleagues 5
Slide 6: Nordics and UK&I benefit from Group scale and synergies
Group context Nordics and UK&I benefit from Group scale and synergies Benefits are in direct cost savings and shared knowledge Cost Savings Shared Knowledge Costs Margin Margins Sales Group technology Group buying strength B2B Group share of business Credit function 6% B2C B2B Improved terms with 94
Slide 7: Group underpinned by a robust balance sheet
Group context Group underpinned by a robust balance sheet Expected to remain net cash positive even as pension deficit continues to reduce Net debt & pension deficit Refreshed revolving credit facility: 400 £525m facility until 200 September 2028 0 (200) £(75)m • Option to extend for an £(213)m addi
Slide 8: Elkjøp overview
Elkjøp overview Fredrik Tønnesen Chief Executive Officer, Elkjøp
Slide 9: Experienced management team with strong track record
Elkjøp overview Experienced management team with strong track record Bringing clarity, grip and energy to the business Fredrik Tønnesen Lill Beate Pedersen CEO 15+ CFO 15+ CEO Elkjøp from 2023 Joined Elkjøp in 2020 as CFO Joined Elkjøp in 2005 as Store Sales Assistant Previously CFO at Nordic IT com
Slide 10: Bringing technology products & services to customers since 1962
Elkjøp overview Bringing technology products & services to customers since 1962 Long history of innovation and growth Elkjøp founded Chain Big stores Nordic Online presence Digital Innovations to in Norway ESTABLISHED to Norway expansion established transformation enhance the total White goods moder
Slide 11: Elkjøp operates a single brand from a central HQ
Elkjøp overview Elkjøp operates a single brand from a central HQ Each market has own management, currency, language and name 140 stores 38 stores Language: Norwegian Language: Finnish Currency: Norwegian Krone Currency: Euro 48 stores 172 stores Franchise Language: Danish Owned stores Language: Swed
Slide 12: Nordics consumers are amongst wealthiest in the world
Elkjøp overview Nordics consumers are amongst wealthiest in the world Population are technologically advanced GDP per capita, 20241 131 106 106 ($’000’s per capita) 88 95 79 81 85 85 64 67 69 51 53 54 54 54 55 55 56 59 59 59 47 49 World’s Most Technologically Advanced Countries, 20232 1) https://www
Slide 13: Highly diversified revenue base
Elkjøp overview Highly diversified revenue base Wide spread of business By country1 By category1 By channel1 By customer1 By type of store1 2023/24 2023/24 2023/24 2023/24 2023/24 Norway Finland Domestic Tele and Store B2C Own store appliances communications Sweden Other Online (Delivery to home) B2
Slide 14: Elkjøp is highly rated by customers
Elkjøp overview Elkjøp is highly rated by customers The preferred brand across all markets, with >90% customer satisfaction Consistently the preferred brand in all markets1 Increasing customer satisfaction over time2 % of customers where Elkjøp is their first choice ~8m customers voted “happy or not
Slide 15: Strong track record of revenue and profit growth
Elkjøp overview Strong track record of revenue and profit growth Disrupted in last two years due to broad market decline 6% revenue growth p.a. from 2011/12 to 2023/24 (BNOK) 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Adjusted EBIT showed steady growth until last t
Slide 16: Market experienced a perfect storm
Elkjøp overview Market experienced a perfect storm Rising interest rates led to consumer downturn and overstocked market led to heavy discounting Consumer price index1 Nordic B2C market monthly revenue growth2 – May 2020 to April 2024 Mar-21 Mar-22 Mar-23 Mar-24 Interest rates1 May-20 May-21 May-22
Slide 17: Elkjøp strategy
Elkjøp strategy Fredrik Tønnesen Chief Executive Officer, Elkjøp
Slide 18: We help everyone enjoy amazing technology
We help everyone enjoy amazing technology Capable and Easy to Customers Grow committed Shop for Life Profits colleagues Sources: Currys Internal information 22
Slide 19: Capable and committed colleagues – our greatest advantage
Capable and committed colleagues Capable and committed colleagues – our greatest advantage Investment in tools, training and reward to maintain and grow our advantage 10,000 100 MNOK Colleagues Annual investment in training 213,000 5,000+ Completed Colleagues attending e-learnings in 23/24 CAMPUS, o
Slide 20: We win together, play together, grow together
Capable and committed colleagues Colleague engagement continues to grow New values launched this summer We win together, Nordic colleague engagement play together, 78 grow together 77 and are proud 76 +4pts to be different YoY 75 together 74 Apr-22 Oct-22 Apr-23 Oct-23 Apr-24 Source: Viva – Glint 25
Slide 21: Elkjøp is the leading technology destination
Easy to Shop Elkjøp is the leading technology destination Curated product offer, value for money, availability and customer guarantees are foundations of proposition Providing customers with all the Relevant and large product Strong customer guarantees technology products & services range with >180,
Slide 22: Wide range of popular product categories
Easy to Shop Wide range of popular product categories Supported by strong supplier relationships Computing Tele and Major domestic communications appliances Consumer Small domestic Kitchen & electronics appliances interior Sources: Currys Internal information. Pie charts represent % share of revenue
Slide 23: Elkjøp has built strong position in mobile phone handsets
Easy to Shop Elkjøp has built strong position in mobile phone handsets Working alongside networks using commission-based arrangements Nordics UK Handset market size (2023/24)1 57 BNOK / £4.2bn £8.6n Phones sold / Handset market1 >20% c.9% share (2023/24) Networks offered Retail outlets 415 stores +
Slide 24: Combining stores and online at significant scale
Easy to Shop Combining stores and online at significant a scale Customers can shop how and when they want Key highlights 2023/24 Omnichannel platform with a fully Customers can shop in integrated offering their preferred channel 287m Revenue by channel 2023/24 Web site visits 55m Store visits Stores
Slide 25: A strong store network provides inspiration, reassurance and ease
Easy to Shop A strong store network provides inspiration, reassurance and ease 400+ stores across three concepts to cater for customer preference and convenience Big box 146 133 City 15 0 Small box 78 43 owned franchise owned franchise owned franchise Own: Own: Own: 1500-4000m2/ 50-700 MNOK 300-1500
Slide 26: Franchise model is complimentary to Elkjøp's own stores
Easy to Shop Franchise model is complimentary to Elkjøp’s own stores 176 franchise stores reach more customers in a cost efficient way Franchise presence Franchise arrangement Financials • Covers areas of lower population densities Finland, Norway and Sweden (159 stores) ~20% of total revenue from •
Slide 27: Website has undergone constant improvement
Easy to Shop Website has undergone constant improvement Online business now represents 27% of total share; peaking at 44% during Black weeks 2000 Launched websites in Norway & Sweden 2005 Started to sell online 2011 - One price, online and in-store 2012 2015 - eCom center of excellence established 2
Slide 28: Distribution network centred in Jönköping
Easy to Shop Distribution network centred in Jönköping Allowing fast delivery to all the Nordics Franchise presence NDC 3.0 1 NDC = 107k m2, main Adding an additional 91k m2 capacity1 equals the size of warehouse (fully operational in October 2024) 14 football fields Reducing carbon footprint for ki
Slide 29: Built a successful loyalty program used by over 50% of Nordic households
Customers for Life Built a successful loyalty program used by over 50% of Nordic households A key tool for accessing data to drive relevance, growth and loyalty Successful rollout in the Nordics Clear customer benefits Higher engagement Customer club members represent over >50% of Nordic households1
Slide 30: Services helping customers enjoy technology
Customers for Life Services helping customers enjoy technology Growing source of higher margin revenue Delivery & Credit Repair Connectivity Installation 1.5m (6)% YoY 2.0m +17% YoY 1.9m +6% YoY >20% Credit customers Orders collected Active repair plans Handset volume market share1 11.9% +200bps YoY
Slide 31: There is plenty of opportunity to deliver continued profitable growth
Grow Profits There is plenty of opportunity to deliver continued profitable growth Growing core business and focussing on clear strategic growth initiatives B2B Kitchen and Interiors Circular business Sources: Currys Internal information 37
Slide 32: B2B is our most important growth area
Grow Profits B2B is our most important growth area We want to double our revenue in a few years Big opportunity in Our growth plan is ambitious We have a clear path to success untapped market Target SMEs – We are playing on 1/6th of the B2B pitch ... untapped potential We are currently competing on
Slide 33: Kitchen and interiors represents attractive opportunity
Grow Profits Kitchen and interiors represents attractive opportunity Chance to re-accelerate following recent downturn Strong historical growth Ambition to double revenue Potential growth levers 28% CAGR from 11/12 Expand K&I offering to even when considering some challenging year due all big box st
Slide 34: Circular business enabled by our repair centre
Grow Profits Circular business enabled by our repair centre Currently 2.6% of our business Circular business in Elkjøp Deals with large volumes Repair facilities Repair >900 MNOK in circular services Protection Refurbish >4m Kongsvinger – Computing, Mobile products taken in for recycling Recommerce
Slide 35: Circular economy is an area where we want to grow
Grow Profits Circular economy is an area where we want to grow Ambition to achieve 10% circular share Multiple areas contribute to We have significant business Four key areas to succeed circular share today, but we have higher Target ambitions Circular business in Elkjøp +3.8 BNOK +30% Repairs 5.0 B
Slide 36: Spotlight on major markets
Spotlight on major markets Linda Frid Andresen Managing Director, Elkjøp Norway
Slide 37: Norway
Spotlight on major markets Norway Original market and still the largest part of the business Local demographics Macro environment3 Technology market4 Consumer Confidence £2.7bn GDP growth rate Language: Population1 Norwegian 5.6m NOK / USD exchange rate Currency: GDP per capita2: Norwegian $95k Kron
Slide 38: Elkjøp in Norway
Spotlight on major markets Elkjøp in Norway Strong leadership position with clear omnichannel proposition that others are trying to replicate Presence Competition Market commentary Player Market Share • Long history and very strong market position • Kitchen and Interior most developed in Norway Geog
Slide 39: Lørenskog megastore
Spotlight on major markets Lørenskog megastore The largest store in Elkjøp Lørenskog megastore Ground floor Opened: Employees 5 May 2008 109 colleagues 1st floor 2 floors, covering Revenue of mezzanine 4,600 sqm 459 MNOK (c£34m) Sources: Currys Internal information 45
Slide 40: Sweden
Spotlight on major markets Sweden We are gaining share in largest market as it moves online Local demographics Macro environment3 Technology market4 Consumer Confidence £4.5bn GDP growth rate Language: Population1 Swedish 10.5m SEK / USD exchange rate Currency: GDP per capita2: Swedish $59k Krona (R
Slide 41: Elgiganten in Sweden
Spotlight on major markets Elgiganten in Sweden Power’s MediaMarkt store acquisition is forcing them to invest a lot to gain recognition Presence Competition Market commentary Player Market Share • Phonehouse stores originated in Sweden which still has higher mobile share of business than other coun
Slide 42: Denmark
Spotlight on major markets Denmark Smallest country allows for a 100% owned model Local demographics Macro environment3 Technology market4 Consumer Confidence £2.8bn GDP growth rate Language: Population1 Danish 5.9m DKK / USD exchange rate Currency: GDP per capita2: Danish $69k Krone (Ranked 10th in
Slide 43: Elgiganten in Denmark
Spotlight on major markets Elgiganten in Denmark Focussing on using market leadership to maintain margins in an aggressive market Presence Competition Market commentary Player Market Share • Smallest country in Nordics makes logistics easier – no need for franchise stores • We expect to open two new
Slide 44: Finland
Spotlight on major markets Finland Economy not yet recovered Local demographics Macro environment3 Technology market4 Consumer Confidence £2.2bn GDP growth rate Language: Population1: Finnish 5.6m EUR / USD exchange rate Currency: GDP per capita2: Euro $55k (Ranked 17th in 18/19 19/20 20/21 21/22 22
Slide 45: Gigantti in Finland
Spotlight on major markets Gigantti in Finland Leadership position allows us to generate profits while competitors are struggling Presence Competition Market commentary Player Market Share • Online propositions seeing strong growth, fuelled by investment from Verkkokauppa • Construction and housing
Slide 46: Financials
Financials Lill Beate Pedersen Chief Financial Officer, Elkjøp 52
Slide 47: Rebuilding towards historic cash flow generation
Financials Rebuilding towards historic cash flow generation Expect to be able to continue rebuilding cash generation Segmental FCF (excluding working capital) 150 £124m £125m £99m 100 £48m 50 £14m 0 19/20 20/21 21/22 22/23 23/24 Target Sources: Currys Internal information 53
Slide 48: Market recovery expected in the long term
Financials Market recovery expected in the long term But prudently planning for limited market growth in near term Nordic market expected to decline in the short term Economic headwinds expected to subside over time Quantity Now Economic headwinds across Nordics Inflation and interest rates remain h
Slide 49: Margin recovery supported by gross margin and cost control
Financials Margin recovery supported by gross margin and cost control Aim to increase gross margin towards pre-pandemic levels with cost stable in absolute terms Gross Margin % Operating expenses 19/20 20/21 21/22 22/23 23/24 Target 19/20 20/21 21/22 22/23 23/24 Target Gross margin Services Cost con
Slide 50: Our strategy drives higher gross margins
Financials Our strategy drives higher gross margins Drivers of gross margin improvement are consistent across the Group 01 Solution selling 02 Higher Services adoption Kitchen growth ambition Nordics accessories adoption rate Nordic credit UK&I credit Active repair Protection plan adoption adoption
Slide 51: Well-invested logistics, IT and store infrastructure
Financials Well-invested logistics, IT and store infrastructure No need to carry out significant investment in medium term New distribution centre now open Store portfolio mature IT improvement implemented Operational efficiencies Limited investment needed to Now driving better will build over time
Slide 52: Stores portfolio is mature and flexible
Financials Stores portfolio is mature and flexible Expect store numbers to be stable, with flexibility to exit leases quickly Store portfolio Average lease length of 3.8 years <1 Year 161 169 175 178 175 178 176 1-3 Years 3-5 Years 248 245 245 249 251 243 239 5-10 Years 10+ Years 18/19 19/20 20/21 2
Slide 53: Capital expenditure will remain controlled
Financials Capital expenditure will remain controlled Capital expenditure and exceptional cash costs should be on or below 1.2% Capital expenditure Future allocation expectations Exceptional cash costs (% of revenue) 1.8% 19/20 20/21 21/22 22/23 23/24 24/25e Target 1.4% 1.2% £nil 1.2% £(4)m 1.2% 1.0
Slide 54: Confident in opportunity to drive free cash flow over medium term
Financials Confident in opportunity to drive free cash flow over medium term Controlled expenditure and higher profit will drive improved free cash flow £15m £33m 2023/24 Working Exceptionals Capital Profit Target Free Cashflow Capital Expenditure Sources: Currys Internal information 60
Slide 55: Summary
Summary Alex Baldock Group CEO 61
Slide 56: Elkjøp summary
Summary Elkjøp summary Clear #1 in attractive market Well invested across stores, logistics and IT Elkjøp has many qualities that Cashflow has been resilient customers value and and will improve further competitors cannot match Has recovered quickly from Upside if consumer environment very challengi
Slide 57: A leading omnichannel retailer of tech products and services
Summary A leading omnichannel retailer of tech products and services With clear focus on generating increasing shareholder returns Strategic priorities Capable and Easy to Shop Customers for Life International Committed Colleagues UK&I product sales UK&I customers Significantly improved market leade
Slide 58: We help everyone enjoy amazing technology
We help everyone enjoy ~ mazing technology. | a ¥: or a | *