I see where you're coming from.Consensus growth of around 10% in eps is currently forecast over 25 and 26 financial years.It seems inevitable after Xmas that jobs will be shed.Oh well,just answer the clarion call and join the public sector! |
My assumption isn’t that all staff are on the minimum wage, my assumption is that £52m will be the minimum cost of the budget to CURY.
Staff on more than the minimum wage will cost even more in employer NIC as it’s the same percentage of a higher wage. Further assuming no discrimination, all staff will be given a 6.7% pay rise inline with the minimum wage rise, if so, the cost to CURY will be far higher than the £52m I estimated.
Revenue and sales have been declining for many years here, the 1% profit last year came from cost cuts. Costs will rise going forward. I suggest CURY will be a loss making company again in 2025. |
The forward PE multiple is under ten,the current price isn't asking much.Just prepare yourself to be shown round the store by an automaton in the years ahead. |
Well price going up so thats good |
Interesting.Your assumption is that Curry shop assistants are all on the minimum wage but this might not be the case.It could be that a good percentage are paid more and thus won’t necessarily benefit from this mandatory Labour minimum wage increase.Yet,your NI calculation is not in question so i’m looking for some modicum of solace.The electorate has just leapt out of the frying pan into the fire.When the consequences of this budget unfold,tax revenues will suffer with the reduction in business profitability and Reeves will be back for more.This is a truly dreadful budget for business,a callous assault upon private enterprise combined with a mistaken belief that a the public sector per se promotes GNP growth..Rachel’s hubby is a senior civll servant of course.It will take more than some inflation busting pay rises for public sector workers to stimulate our consumer driven economy. |
Nice breakdown trader, unfortunately netty still won't understand. |
Buy now pay later needs to be watched closely.
This might be a future area of review and potential compensation in my view. |
Currently: minimum wage £11.44 per hour, assume 40 hours per week = £23,795.20
13.8% employer NIC after £9100 threshold = £2029.53.
Total cost per full time employee £25,842.73
After the budget: new minimum wage £12.21 per hour, assume 40 hours per week = £25,396.80
15% employer NIC after £5000 threshold = £3059.52
Total cost per full time employee = £28,456.32
Therefore, with increased NIC rate, reduced threshold, and higher hourly rate the cost per employee rises by £2,631.59
If CURY has 20,000 full-time equivalent hourly paid staff. The total cost of the increase in the hourly rate and employer NIC is £52,611,800
A drop in the ocean? Half the ocean has drained away! |
What you forget netcurtains is the threshold when NI starts to be paid by employers has dropped to £5000.which adds to the expense of NI |
Nice to see Labour have pulled the wool over someones eyes at least... |
It’s fine - stop whinging Tory pomming - drop in ocean…. Their teacher and nurse customers will be loaded - going to fly |
Indeed and it's almost impossible to simply pass these rises on to customers.Currys operates in an incredibly competitive environment where nearly all customers check prices on line before buying if they put them up they lose sales to the competition it's as simple as that.As with most things it's not all doom and gloom they still have made decent progress in the last few years but make no mistake having a huge amount of employees and operating on tiny margins the budget just made things a lot tougher imo. |
Nettygirl
The 1.2% increase in NI is not the main issue, its the lowering of the threshold from £9,100 to £5,000... So an extra £4,100 payable @ 15% = £615 PA.
Any employer already paying NI on employees will be hit with an extra £615 per employee, per year, bill straight from the bottom line.
30,000+ curry's employees = At least £18,450,000 extra on the NI bill. Plus the 1.2% on anyone already over the £9,100 threshold. Depending on margins a lot more goods need to be sold to cover this.
Sprinkle in Minimum wage going up to £12.21 paid by the employer.
There will be massive Job cuts to save on these costs, try and make employees more efficient. No pay rises. etc.
It is at the point where to actually do business in the UK is too expensive.
Please don't invest in shares if you can't wrap your head around basic financials. |
I doubt a 1.2% inscrease in NI is going to be neither here nor there. Its miles less than inflation...
You Tories are totally stark raving bonkers...
Your mind works like this "if its not tory its the end of the world, no ifs buts or exceptions"...
Take a chill pill. |
Yes, all small margin businesses with a large number of employees will be hit hard. My guess is CURY and Spoons will go back to the lows over the next 12-18 months |
Everything will get more expensive, jobs will be cut, businesses will close. |
And for a company that operates on tiny margins that's a tough pill to swallow. |
The higher minimum wage, higher NIC percentage and lower threshold will cost Currys about £50m |
Not if they supply the government with PCs.... |
New tax rates will hurt all retailers |
 Panmure Liberum -
As we head into peak, one should not forget that Currys offers huge potential upside. We do not need the macro to improve in order to hit our FY numbers but if trading continues as we saw in the first 17 weeks to 24 August, then the groups 20% drop through margin should drive upgrades. Near term share price catalysts: pension triennial review from Q1'25 could free up FCF, the reinstatement of a dividend (could offer 2-4% yield) and peak trading could be robust with tech replacement cycle + AI product rollout as attractions. In this brief 3-page note we detail how SOTP>current market cap; why we are so keen on this stock and where the sensitivity lies. BUY Liberum view on trading, outlook for H1 and momentum could lead to a beat to numbers The UK market has improved to a +5% LFL up from +2% exit-run rate from the prior year. The Nordics may be little softer but competitive dynamics are less. Group GM% performance appears robust and most encouragingly we are seeing strong tailwinds in computing, laptops, and mobile. The group has achieved +2% LFL for the first 17 weeks of FY25 vs. PanLib forecast of -1.2% for FY’25E. H1 results (12 December) should show incremental improvements vs LY so UK EBIT up YoY with Nordics EBIT flat delivering modest PBT growth in H1. Focus is always on H2 where the group is heavily H2 weighted. On revenues, PanLib forecast does look cautious as (1) the technology replacement cycle takes hold, (2) mobile subscriber base is already nearly at the group’s FY target, (3) we just at the start of the AI boom, (4) services adoption continues to rise and (5) all this before we even talk about the consumer and the macro. Further, GM% appear to be robust especially in the Nordics where normal market competition resumes and UK has made progress. If the interest rate burden eases and we see housing transactions recover + a softening in the savings rate; Currys looks incredibly well-placed to see significant earnings momentum.
Value driver - The model has changed and with 20% drop through margins, one needs to focus on EBIT margins as a key valuation driver. We see the opportunity for EBIT margins to double from here and this could drive 100% upside in equity value even before we consider a re-rating. What the market misses - We do not need market recovery to hit our numbers, but we are seeing tantalising signs of improving sentiment. The competitive environment is more rational, and most are focussing on margins and profits. The tech replacement cycle is upon us (post COVID boom) and new AI infused products will drive incremental interest. For only a 5% revenue uplift, earnings could beat by 50% in FY25 & 78% in 2026. Quality of earnings has improved - The quality of the group’s revenues has massively improved with nearly £700m of revenues now being high margin service related. We know cost savings accounting for c.£270m have been made over the last three years, with 1/3 coming out of the fixed cost supply chain. This means incremental revenues convert at a 20% margin, making the earnings very sensitive. Never underestimate the market leader - A UK market share of 23.3% is under pinned by 63% online tech share and c.300 stores. Penetration in Nordics is higher at 28% share but only 35% tech online share. Key to growth is to drive share of wallet through leveraging the 12m active repair plans, >2.5m credit customers and c.1.8m iD mobile subscribers. Key point - For every 1% change in sales = around £10m PBT uplift. This means that the uplift to FCF is material. We forecast £52m of FCF in FY25E (after £50m of pension contribution). This contribution rises to £78m in Fy26E which then subdues the FCF to c.£20m-£30m p.a. for the next three years. However, the sensitivity of the model suggest that it does not take much to materially change this profile, and a current FCF yield of 3.5% for Dec-25E, could double off a 2% change in LFL sales. The sum of its parts is much greater than the whole – for now! What is NOT in the share price If we look at the constituent parts of the EV we have the following: 1. Elkjop could be worth £700m to £800m on depressed multiples and earnings - Elkjop achieved £116m of EBIT in FY20 - a clean-pre COVID period. Despite numerous revenue and margin drivers (which we detail in this note) if we assume this is achievable again then at a multiple of 6-7x puts a value of £700m to £800m on the Nordics business. 2. ID mobile could be worth c.£360m - Precedent MVNOs M&A reflects an EV / subscriber range of c.£200-£350. Taking the bottom of this range suggests a value for iD Mobile of around £360m. info @ fpcfinancial.co.uk 3. Net cash of £96m at the end of FY24 includes an IAS 19 pension deficit of £171m (IAS19)
This leaves an equity value of c.£1.2bn against a current market cap of c.£1bn. Suggesting the UK Curry’s business has a negative equity value of c.£200m. For FY25 we forecast EBIT of £211m (£145m from Currys and £65m from Elkjop). What makes this valuation arbitrage even more compelling is the following: a. There could be no pension deficit by 2027 and this should free up £80m of FCF p.a. i) We can argue what multiple to place against this, whether its 4x up to 8x – the point is the value accretion from releasing this cash could add a further £320m to £640m of equity value. b. Some may not want to wait that long – which is fair and they probably might not have too. A triennial review is scheduled to start in March 2025 from which the annual payments of c.£80m may be reduced. Even if this reduced by 25% to 50% the equity upside could be anything from 10% to 25% higher. c. And then there is the prospect of continued upgrades having delivered 25% uplift in FY24: For every 1% change in sales = around £10m PBT uplift. This means that the uplift to FCF is material as FCF is suppressed due to elevated pension payments. With these ending in FY27 or even could be cut next year post the triennial revenue suggests this could release substantial equity value in the near term. In the meantime, a current FCF yield of 3.5% for Dec-25E, could double off a 2% change in LFL sales. |
3 Samsung American Style Fridge Freezers should do it. |
be great to get this over 100..... |
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