Currys Plc · LSE:CURY
Currys — Peak 2022/23 Earnings Presentation
32 slides from Currys's earnings presentation, Jan 18, 2023
Slide 1: Currys plc Peak Trading
Currys plc Peak Trading 18 January 2023
Slide 2: We help everyone enjoy amazing technology
_ We help everyone enjoy ~ amazing technology. Sad
Slide 3: Group Summary
Group Summary UK&I International Outlook Strengthening results, driven Significant market disruption, by Gross Margin which we expect to be guidance, and well set for improvements and cost temporary, and actions long term success, despite savings underway to rebuild challenging environment profitabi
Slide 4: Peak summary: Like-for-Like Sales
Group Peak summary: Like-for-Like Sales UK&I Nordics Greece 12% YoY -5% 6% -7% 4% -8% -8% -10% -10% H1 Peak YTD H1 Peak YTD H1 Peak YTD 2% 10% 25% 8% 21% 0% Yo3Y 5% 13% -4% H1 Peak YTD H1 Peak YTD H1 Peak YTD 4
Slide 5: Market share trends improving and gross margin momentum building
UK&I Market share trends improving and gross margin momentum building Currys UK Market Share YoY change Gross margin YoY change H1 22/23 Peak 22/23 +160 bps (120 bps) H1 22/23 Peak 22/23 Source: GfK 5
Slide 6: Strengthening UK profits from gross margin improvements and cost efficiency
UK&I Strengthening UK profits from continuing gross margin improvements and cost efficiency Gross margin showing continued improvements Adjusted EBIT growing again UK&I Gross margin UK&I Adjusted EBIT £34m £25m £21m £20m £10m H1 16/17 H1 17/18 H1 18/19 H1 19/20 H1 20/21 H1 21/22 H1 22/23 H1 16/17 H1
Slide 7: Higher Services adoption; not chasing less profitable sales
UK&I 1 2 Higher Services adoption Monetising the improved customer experience Credit Adoption rate (%) Care & Repair adoption (%) Big-Box Delivery CSAT 18.2% +240bps +430bps YoY +26pts 13.9% YoY Peak 21/22 Peak 22/23 Peak 21/22 Peak 22/23 Nov-18 Nov-19 Nov-20 Nov-21 Nov-22 3 4 Not chasing less profi
Slide 8: Excellent progress on reducing costs
UK&I Excellent progress on reducing costs Transformed our in-store labour model Operating Cumulative to end H1 Gross margin Total expense Supply chain £23m - £23m Stores £3m £34m £37m • Removing non-value added tasks GNFR >£1m £9m £9m • Developing multi-skilled colleagues IT & Central - £44m £44m We
Slide 9: Stock down materially year-on-year
UK&I Stock down materially year-on-year UK & Ireland (22)% Yo3Y (9)% YoY Peak 19/20 Peak 21/22 Peak 22/23 Source: Currys internal information, refers to stock level at 31 December 2022 and equivalent period end date for prior years 9
Slide 10: Significant (but temporary) disruption in International markets
International Significant (but temporary) disruption in International markets Softening demand Overstocked market High levels of Market profit pool Nordic market size Aggressive competitors discounting down significantly Komplett adj EBIT margin (six months to end Sep) (3)% 3.5% YoY +15% -0.3% Yo3Y
Slide 11: Nordics market share and International gross margin YoY change
International Nordics Market Share YoY change International Gross margin - YoY change H1 22/23 Peak 22/23 H1 22/23 Peak 22/23 (50) bps (200) bps Source: GFK 11
Slide 12: Significant areas of margin improvement and cost reduction underway
International Significant areas of margin improvement and cost reduction underway Gross margins Cost reduction • Pricing: margin optimised pricing, • Marketing: reduced introduced charging for services • People: head office redundancies, • Promotions: more selective external consultant savings • Sup
Slide 13: Stock in good position
International Stock in good position International (5)% YoY +12% Yo3Y Peak 19/20 Peak 21/22 Peak 22/23 Source: Currys internal information, refers to stock level at 31 December 2022 and equivalent period end date for prior years 13
Slide 14: Outlook & guidance
Financial performance Outlook & guidance Second half outlook Full year guidance unchanged • UK&I to deliver robust profitability with profits • Adjusted PBT to be between £100-125m increasing YoY • Capital expenditure of around £120m • International profitability to remain low • Net exceptional cash
Slide 15: A stronger business that can weather challenging environments
Group A stronger business that can weather challenging environments Strategic priorities International Happier colleagues Winning More Robust Market leader & customers Omnichannel Model Customers for Life balance sheet Nordics customer Group liquidity club members 79 UK&I Product sales 6.8m 7.1m 5.4
Slide 16: We help everyone enjoy amazing technology
Group We help everyone enjoy amazing technology Capable and Customers need an We are building committed colleagues - easy shopping experience customers for life our greatest advantage For our customers, we will be easy to shop We want to be more valuable to customers: This means doing more than sell
Slide 17: Technology market is still larger than before the pandemic
Our Markets Technology market is still larger than before the pandemic UK Electricals market vs. pre-pandemic Nordics Electricals market vs. pre-pandemic 35% 35% YTD H1 30% 30% 22/23: 22/23: 25% +13% 25% +15% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% -5% -5% Source: GFK 3 month rolling average 17 Pre-pand
Slide 18: Capable and committed colleagues
Capable and committed colleagues More engaged colleagues mean more satisfied customers Colleague Engagement Customer Satisfaction 79 80% of UK&I Nordics Happy or Not + 2 pts customers say + 5 pts YoY colleagues are the Yo3Y UK&I Retail only eSat main reason for a UK&I NPS + 12 pts Yo2Y 67 Nov 2020 O
Slide 19: Progress on retail fundamentals
Retail fundamentals Progress on retail fundamentals Larger range Invested in price Easier experience UK&I Range continuing to grow Clear price promise Improved delivery and collection experience UK&I SKUs 64 +7 pts 20k Yo3Y 18k 16k 25% 57 Yo3Y CSAT 46 +4 pts Yo3Y 42 2019/20 H1 2021/22 H1 2022/23 H1
Slide 20: Strategy in action - Maintaining Peak deliveries
Retail fundamentals Strategy in action - Maintaining Peak deliveries Response to Royal Mail strikes Maintaining our service levels with DPD • Small Box home delivery volume switched • Increased volumes from all retailers to DPD • Issues with next day service in c 10% of our sites • Maintained standa
Slide 21: Omnichannel: building on our strengths
Omnichannel building on our strengths Omnichannel is the preferred Investment in stores New online platforms model Tech customers use both channels Investing in colleagues, while Invested in new platforms which are increasing flexibility and efficiency 79 46% 19% Both Store Store26.8% only UK&I Stor
Slide 22: Strategy in action - Bundling
Omnichannel Strategy in action - Bundling The additional kit that helps customers enjoy tech In-store bundling is up Laptop + Software / Keyboard / Mice In-store adoption rate TV + Bracket /theatre kits / cables +580bps Gaming console + Game / memory card H1 22/23 Peak 22/23 Improvements made Big op
Slide 23: Growing Services to help build Customers for Life
Customers for Life Growing Services to help build Customers for Life We help you We help give We help you get We help get afford the your tech longer the most out of you started amazing tech life your tech UK&I Credit adoption rate UK&I Installation adoption UK&I Care & Repair adoption iD mobile sub
Slide 24: Credit saw another period of record adoption
Customers for Life Credit saw another period of record adoption More credit sales Higher adoption 18.2% +27% YoY +430bps YoY Peak 21/22 Peak 22/23 Peak 21/22 Peak 22/23 More credit customers Driven by online 20.3% +710bps 1.9m YoY 15.9% +120bps +17% 14.7% 13.2% YoY YoY 12.7% 9.6% Peak 21/22 Peak 22/
Slide 25: Protection adoption growing in both channels
Customers for Life Protection adoption growing in both channels Adoption growing with big opportunity online Stores Online +270bps YoY +110bps YoY Peak 19/20 Peak 21/22 Peak 22/23 Peak 19/20 Peak 21/22 Peak 22/23 Source: Currys internal information 25
Slide 26: Connectivity is a key part of Services
Customers for Life Connectivity is a key part of Services Handset suppliers iD our award winning MVNO iPhone SE 14 Pixel 7 S22 Z Flip 4 Rounded proposition • Customer principles: Value, Flexibility and Control • Data rollover, inclusive roaming in 50 destinations, 30-day SIMs • 5G at no extra cost A
Slide 27: Strategy in action Domestic appliances
We Help Everyone Enjoy Amazing Technology Strategy in action Domestic appliances Last year Actions taken Result this Peak • - Availability Availability issues first- +14pts YoY IT stability Delivery issues Contact Centre Delivery CSAT +5pts YoY • New Harworth warehouse Delivery Market Share • 19 Sep
Slide 28: Improved balance sheet and strong liquidity
Group Improved balance sheet and strong liquidity Total average indebtedness Interim balance sheet £140m £571m £(2,534)m £(1,626) - £536m (500) (1,000) (1,500) £(105)m (2,000) (2,500) (3,000) H1 19/20 H1 22/23 Bank covenants Average net cash / (debt) Restricted cash • Fixed charge cover >1.75x (1H 2
Slide 29: Medium term targets
Group Medium term targets Steady growth EBIT margin Capital expenditure New cash exceptionals <1.5% of sales £minimal Annual sustainable free cash flow >£150m Growing shareholder returns Annual sustainable free cash flow is defined as operating cash flow less capital expenditure, exceptional cash fl
Slide 30: Currys Summary
Currys Summary Challenging market backdrop Making more of proven Omnichannel model UK&I profits strengthening as Building more customers for transformation benefits show life through Services International profits hit by Balance sheet strong with (temporary) market disruption ample liquidity Record
Slide 31: We help everyone enjoy amazing technology
_ We help everyone enjoy ~ amazing technology. Sad
Slide 32: www.currysplc.com
Visit our corporate website www.currysplc.com 33