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Author: Alan LittleDate: 2021-12-16

Currys (CURY) -9% after sales warning sparks share sell-off

British electrical retailer Currys (CURY) closed down 9% on Wednesday after it said that market demand had “softened” in December and COVID-19 concerns were growing.

Currys (CURY) shares cratered 9% in London on Wednesday after the British electrical retailer said that its immediate outlook was “uncertain” amid growing concerns about the impact of the Omicron COVID-19 variant.

In a new update, Currys said that it was still on track to post £160m profits for the full year after a strong six months to 31st October that yielded £4.79bn in revenue and a bottom line of +£48m.

While customers are happy and margins are stable, Currys said that market demand had “softened” in recent weeks, while supply chain problems have been a constant challenge.

Another potential stumbling block is the rising number of COVID-19 cases, driven by the spread of Omicron, which could lead to government restrictions and hit consumer demand yet further.

Those warnings prompted a stock sell-off on Wednesday as investors headed to the sidelines.

However, several analysts struck a more upbeat tone in new notes.

Liberum believes that Currys’ “market-leading position and scale” put it in a good place to weather the storm, adding that the stock is currently “far too cheap”.

There may be an opportunity for investors to buy into CURY after the latest drop, as a 9.27% decline by Wednesday’s close meant that shares were being traded for just 112.50p, which is way down on its 159.20p 52-week high.

Hargreaves Lansdown pointed to the strength of Currys’ online channel, which now accounts for a third of all sales, as a potential bulwark if in-store sales are hit in the coming months.

Meanwhile, AJ Bell said that Currys’ full-year guidance could be “slashed” in a worst-case scenario, though it still expects the company to be fine in the long term.

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