Currys plc (CURY) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to our peak trading update, not quite in real life, but at least we will show the continuing relevance of stores as part of our omnichannel model, the importance of our colleagues and the effectiveness of our marketing is 3 features of our strengthening performance today. And today, you will hear about a strong peak results from the strategy that's working. It's good to get the Nordics back into like-for-like growth, performing well in a still weak market. It's good to see the U.K. and Ireland for the first time in COVID, showing like-for-like growth over peak continuing to show strengthening performance. And in both markets, good margin and cost discipline, building on a strong first half that leaves us confident in beating consensus for this year's profits and together with strong cash generation and improving cash generation and a strong balance sheet and imminent return to the dividend. Now I'm going to talk about the strategic progress that lies behind this performance after Bruce takes you through the numbers.

Thank you, Alex, and good morning, everyone. So let me quickly remind you of our half 1 results that we shared in December. It was a good period with revenue at GBP 3.9 billion, up 1% year-on-year. Remember, U.K. plus 5%, Nordics minus 2%. From a profit perspective, our adjusted EBIT was GBP 41 million, up 52% year-on-year with both markets up around 50%. Our adjusted EPS was up 1.7p at 0.6p. We saw free cash flow very strong at GBP 50 million, up GBP 46 million year-on-year, particularly strong within the U.K. and that gave closing net cash of GBP 107 million. We also saw our pension deficit fall by GBP 45 million year-on-year to GBP 143 million, which helped our total indebtedness. Moving on to the 10 weeks of peak. As Alex said, a very healthy performance continued. Our sales like-for-like in the U.K., plus 2% in the Nordics, plus 1%. Both markets seeing positive year-on-year growth for the first time since the pandemic. And with a strong peak behind us, we can now share a profit outlook. For the full year FY '25, our group adjusted PBT is expected to be in the range of GBP 145 million to GBP 155 million. That equates to between 23% and 31% year-on-year increase, and that's despite the impact of the U.K. government budget measures. Trading also allows us to share more details on shareholder returns. The Board expects to declare a final dividend of around 1.3p at our full year results in July. That represents 2/3 of our full year dividend at around 5x adjusted EPS cover. Looking ahead, surplus cash will be returned to shareholders in line with our capital allocation policy. Let me hand back to Alex.

Thanks, Bruce. Before I get to strategy, let's start with some color. This peak, we saw drones flying high, especially DJI. We have a much better range and availability of these along with action cams, especially the GoPro Hero 13 bundle these 2 together, so called videography, up 15% year-on-year. Computing at a really good peak. Overall, our fastest growing category and tablets and Windows PCs and in gaming PCs as well. So the AI trend really is picking up steam, that's good for us as we have 75% market share of AI PCs. We expect a big year in 2025, for computing, especially when you throw in the imminent Windows refresh, which is always good for computer upgrades. Health, beauty and fitness. There's an electrification trend that's really now hitting home in health and beauty in the earnest. You can see it as effectively growing our total accessible market. I mean, the likes of Shark beauty masks, for example, see the customers buying technology instead of face cream and we expect this mask to go well in the Valentine's Day and Mother's Day. Other highlights are Oral B toothbrushes, Remington Stylers, Braun and Philips Shavers all going well. Large screen TV. I mean, TV overall wasn't our strongest category over the peak, but this supersizing trend, which took up in Germany and is now coming to the U.K. in earnest shows no signs of abating a 98-inch plus TVs were the fastest-growing part of the market, up 400% year-on-year. Coming is 120-inch TV. There's 160-inch TV that I saw at CES in Vegas last week, which is coming along. We're best placed for this because we're the only retailer who can showcase TVs on this scale from the likes of Samsung, HiSense and TCL. And we're the ones who consult the delivery and installation headache that comes with it. Finally, coffee is perking up, bean-to-cup coffee machines up 34% year-on-year. Starbucks sales declined, so in-home coffee sales are growing. And of course, we've got over 50% market share in this space. So, so much for color. Now let's get to drivers of performance. Starting with the Nordics, where we're getting back on track even in this weak market and showing strengths of our business, good peak results with sales up, market share gains, gross margins up again and further cost savings, as you heard from Bruce, a story of the business outperforming its market. And I appreciate that not all of you were able to attend the Oslo Capital Markets Day recently. So let's step back a minute and look at this Nordics performance in context. Until the recent market dislocation, Elkjøp enjoyed a long track record of revenue and profit growth, 8% of sales growth in the 10 years of COVID annually and a similar level of EBIT growth. And now we're recovering from the post-COVID slump despite a still weak market. Now the market in the Nordics has had some well-known problems in recent years, a consumer downturn with high inflation and interest rates in overstocked market and a volatile currency. And today, customer demand is still weak, but despite falling inflation, which is now at or less than 2%, interest rates are persistently high and the Nordics consumer is especially exposed to these with a very high penetration of very variable rate mortgages. So inflation coming down and consumer confidence is still low. Though it is trending upward and -- but what we're seeing overall is despite some signs of life, a market that's averaged 3% down a year in recent years. And in this market, you know, the team is responding well and growing market share, extending our lead as the market, number one with gross margins now recovered to historic levels, a 3-year high, but with further to go, especially through sales with the solutions and services and, especially through further reductions in supply chain and service operations costs. So this margin discipline, plus good cost discipline when we're seeing lower absolute costs in the first half and peak year-on-year. These disciplines have seen our profits as well as our sales recovering ahead of the competitors, the likes of Komplett, NetOnNet and Verkkokauppa. And these, let's remember, with the online pure-play competitors, who said they were coming to eat our lunch after the pandemic. While our EBIT is up 40 basis points to 1.1% positive in the first half, whereas Komplett's is down by nearly 200 basis points to minus 1.2%, Verkkokauppa's down by 250 to minus 1.1% neither of these competitors is producing any free cash flow. And given that the market is more rational now, and they're not making any money at all now, does have to raise some questions about the business model, but our improving performance rests on some important competitive advantages. I mean, notably scale, well-invested infrastructure. Historically, that we've invested in a way that should give confidence in future cash flow generation and there's no prospect of any big new investment required. We can keep CapEx really well controlled. Our logistics is modern and efficient and we've got centralized Nordics distribution center based around young shopping in Sweden, which recently effectively double capacity to nearly 200,000 square meters. Our stores are well invested and high spec and we've got a fully upgraded IT platform. So to sum up the Elkjøp context, I mean we're a clear #1 and what is still fundamentally healthy, wealthy markets. We're outperforming competitors, recovering faster. We're well invested. We've got relatively resilient free cash flow, which will grow further. And there's upside if the consumer environment recovers ahead of our pretty prudent expectations. In the U.K., meanwhile, you've heard that from Bruce, we had a strong people with like-for-likes back into, building on a strong first EBIT margin and cost discipline there, too. And in both the U.K. and the Nordics, we owe our strengthening performance to a strategy that's working, a strategy that's transformed historically bricks-and-mortar retailer into an omnichannel retailer and services provider through colleagues, who know what they're doing and who actually want to be here. Who make us easier to show up for customers and who, in turn, encourage those customers to become stickier and more valuable customers for life in our language, in turn allowing us to grow profits and cash flow. And this, as the scale specialist in our market, and we've maintained that #1 position in every market, including recently, nudging forward our market share with world-class colleague engagement and with our eSat, employee satisfaction now firmly established in the top 10% of companies worldwide and growing customer satisfaction with the U.K. up another 2 points in NPS in the first half. That's up 9 points year on 3, and our Trustpilot store in the U.K., having climbed in the last 12 months from 3.6 to 4.2, just saying that we've now overtaken John Lewis, who are at 4.0. So good progress in U.K. Likewise in the Nordics, we've recently moved to NPS almost up to U.K. levels already, which is -- by the way, developing some pretty healthy competition between the 2 markets. Now we owe this improving customer satisfaction in part to being easier to shop for our customers. And first, that's through better retail fundamentals, a better range, 2/3 bigger than pre-COVID, better availability, our best for 5 years in store, small box and big box availability up 6, 7 and 20 points, respectively, year on fall. We're more trusted on price. Our price competitiveness perception is 340 basis points up year on 3. And we're easier to shop as well because as we help customers shop how they want to shop, which is omnichannel. It's still omnichannel in our category anyway. And one way to look at the left-hand side of this chart is that our online-only competitors have a total accessible market, less than 1/3 the size of ours in effect, whereas we can go for the whole thing. And we can get the whole thing because first because we're big online as well as in stores. We're over 2.2x the size of AO online in the U.K. and in the Nordics, we're nearly 4x the size of Verkkokauppa, 10% bigger than NetOnNet, Komplett, despite online sales only making up 25% of our sales in that market. And we're investing in both channels, too. We're reengineering 113 stores in the U.K. this year. We're allocating more space to the most profitable, fastest-growing categories, introducing new products, new categories that drive greater frequency in the stores. And we have made over 60 online customer experience improvements as a navigation, search, filtering easier checkout. And these investments we can make as a result of the healthier financial position of the group. And omnichannel sales are the fastest growing part of the business, joining up online and stores in a way that competitors can't. We're getting better at serving customers through both the channels together. So omnichannel sales up to over 30% of our sales from 25% a few years ago and order and collect up 13% this peak. We're also easier to shop because we're getting it right first time more often for our customers. And a customer after all likes it when we turn up with the right cooker undamaged at the point in time and with the right colleagues and parts to install it there and then also saves us, by the way, the cost of having to return another time. And so the number of 30 this year, a small right first time initiatives add up to some quite big customer satisfaction gains at every stage of the customers purchase whether purchase delivery collections, you see on the left-hand side, big gains in customer satisfaction and some significant cost savings, GBP 14 million already with more to come as you see on the right. So we're easier to shop them and with further to go. We're building stickier and more valuable customer relationships too, customers for life, first through selling more of the complete solutions, which are good for customers because they get everything they need and buying off if they buy the bundle together, and it's good for us because we make significant to be more margin. And so the progress in solution selling is good news for everybody, and that's up 13 points year-on-year to 38% of eligible sales in the first half, up to 41% is really good progress through both channels, but in terms of selling complete solutions. Now these solutions include services as well as products, of course, services that help the customer through the life of the product and services that are the source of additional higher margin and recurring revenue for us, big revenue to over GBP 670 million of U.K. services revenue a year over 1/4 of it recurring. Then you add that to getting on for GBP 1 billion of product sales on our credit service. So services provide a competitive advantage to Currys, resting as they do on scale and capabilities that no competitor will ever realistically match them. And if we didn't have these capabilities, it's hard to see us building them today, but luckily, we do. And these services start the credit. I mean the service that helps customers afford sometimes expensive technology. And the credit customers, you'll remember, are happier with NPS over 20 points higher the noncredit customers, they buy more. They have a higher adoption rate of other services and they shop more often more than twice as likely to return within the next 12 months. So credit's good for Currys as well as for customers. So it's important it's going well as it is peak credit adoption up 250 basis points to 23%. And Currys credit, by the way, is now the leading way to pay for Currys customers over taking credit cards, of which are 18% of sales. And this credit growth is coming from both channels. It's coming from existing customers. Now nearly 2/3 of credit sales, up 300 basis points year-on-year. It's coming from new customers too, active accounts now 2.5 million and counting up 15% year-on-year. And this has been driven by the relaunch of credit as Currys Flex Pay credits now available on all products, including the online in-store extended range, and we can better simulate customers repeat purchase from their unused credit limits. Progress here, but still plenty to go forward with over GBP 5.1 billion of unused balances still to simulate. So much more to come from credit. Not just credit though, our services to help customers get started the likes of setup and installation are also in growth now over 30% of the white goods are installed by Currys and there's more to come here on installation as this rate, we would say, is still too low. The same is true of repairs. Even with over 12 million repair customers. Repairs, you'll remember, is good for customers packet, the planet and our profits, repair plans have got very healthy margins. And importantly, again, this is based on capabilities that others simply don't have, like Europe's #1 electrical repair center that many of you were visited in Newark with over 1,000 colleagues, 3 others like it in the Nordics. I mean we're trusted by partners too, in recent evidence that from Microsoft who have given us an exclusive contract to repair their service and Xbox products. And we've done a good job of building capability here. We have not yet done a good enough job of getting it known. So there's plenty more to come from that. And then finally, how we help customers get the most out of their technology is an important service, for example, connecting their tech. And here, iD mobiles growth is important, and it's growing well. Customer number is up 30% to 2.1 million in December with lower churn and higher ARPU. And we've done this through market-leading value for money through the excellent terms that we have with 3 as well as improvements in the customer experience, for example, the app now being used by 1.3 million customers, evidenced in high NPS and a great Trustpilot rating. So I mentioned our healthy financial position is allow us to invest in channels. It's also allowing enabling the growth here because as you'll know, the benefits of iD are deferred, that is a near-term drag on profit and cash flow from growing iD, excellent NPV though it has. So we can sustain it because of our healthy financial position, we can also sustain it because of the Vodafone 3 merger, the CMA remedies announced in December have secured our current and excellent terms until the end of 2031, a benefit that we see from the merger alongside better network of coverage for our customers. So aligning to, happy to answer any questions and all the strategy a bit later, but I'm going to pass on to Bruce to talk through outlook.

Thank you, Alex. Let me revisits our financial position. So firstly, we have a strong balance sheet. At the end of the first half, we had net cash of GBP 107 million and a pension deficits of GBP 143 million. So overall, net indebtedness of GBP 36 million, and that compares to over GBP 800 million 5 years ago. Our medium-term ambition in terms of margin remains the same to get the group EBIT margins to at least 3%. In the U.K., we're broadly there. In the Nordics, despite 18 months of great progress, there's more to do, but we're confident we can get the Nordics to 3% margin. We're also confident in delivering improved cash flow with margin improvements and particularly disciplined within CapEx and exceptionals, we will increase cash available to equity, allowing healthy shareholder returns. And finally, our capital allocation priorities are clear. We will maintain a prudent balance sheet. We'll continue to pay the required contributions to the pension scheme. Although as you've heard, we expect these to reduce as the deficit pulls away. Available cash will then be used to invest to grow with the business to pay and grow the ordinary dividend, again that we've announced today with surplus cash available to be returned to shareholders. Let me hand back to Alex.

Yes. Thanks, Bruce. I'm going to conclude very quickly. I mean, looking ahead, we're confident we're going to continue this progress. And we're confident as our performance continues to strengthen in the first half this peak, this year and with the improved profit and free cash flow outlook, we're talking about, today, and the resumption of shareholder returns as you heard. Nordics, we're back into growth and peak, a strong business is outperforming the weak markets and with upside is that market recovers faster than we're prudently planning and in the U.K. our encouraging multiyear momentum continues with a strong peak and strategy behind both the U.K. and the Nordics, which is pleasingly working. So with that, thank you very much, and we will get to your questions.

[Operator Instructions]. And our first question is from Monique Pollard from Citi. We lost Monique. And so we'll move to our next question from Wayne Brown.

Firstly, well done. I thought good peak trading update in difficult conditions. So just quickly, 3 questions for me. Firstly, what's in guidance for the U.K. and the Nordics in terms of revenue growth for FY '26? And I can give you the other 2. I don't know if you want them all at once so what. And then just on the U.K., a little bit of a slowdown from the H1 run rate. Maybe you can just talk us through that. It looks like all the trends in the categories are kind of performing as we expected. You mentioned computing and a few others. Can you just give us some flavor as to what happened over peak? And then we've obviously got this pension review, which is clearly potentially another catalyst coming through the pipe. Now that you've got dividends resuming back, if there's any further cash, which becomes available post the pension review. I suppose any thoughts as to what the Board has discussed on more dividends, buybacks or what you might do with that extra cash? That's...

Thanks, Wayne. Let me deal with the second first. You talked about a slowdown during peak. That's not quite how we see it. I mean what we're looking at our year-to-date performance, we're quite pleased with. That includes a peak where we returned in both the U.K. and the Nordics to like-for-like growth year-over-year for the first time in quite some time, in fact, many years with the COVID showed a rough year aside and allowing to exceed profit expectations with good margin and cost discipline too. So we're quite pleased in short with modest but continuing top line growth, which is one of the drivers of the improving profit outlook. Now you asked for a bit of color. Yes, TVs were a bit disappointing. The supersize and trends notwithstanding, which is the [ bright spot ] perhaps the outlook that we've been a bit better there. But if you want to pick out the highlights, it's certainly going to be in premium mobile and in computing overall. And both of those of course are in the AI trends in common. And this is a real trend. And we worked hard to establish customers' minds the Currys brand as the home of AI. We've worked hard with customers and our part supplier partners to make sure that Currys has got a very strong, 79% market share in AI PCs. Many of the OEM, the silicon providers, the software providers all believe that the big replacement cycle coming in computing driven by AI, driven by the Windows refresh, driven by the natural coding replacement cycle. I wouldn't want to put a number on that forecast, except to say that being able to get back -- to the extent that, that comes, we're going to be ready. And we've established a strong position to benefit from that.

Okay. Wayne. So to your first question, in terms of guidance, obviously, in December, we talked about off the back of strong trading this year that we were going to be facing in some cost headwinds. We talked about our ability to cover off half of both. We would be doing our best. But beyond that, we've still got 4 months of trading to go this year. It's certainly too early to be speculating in terms of where we expect the market to be either top line or bottom line. So I would say that's broadly where we are. In terms of dividend, obviously, we guided previously that we expected to announce a dividend within our full year trading. This morning, we've gone one step further, being able to direct to the amount, 1.3p and to explain the cover. Again, it's too early to think beyond that other than to guide you back to our capital allocation policy, which is that as we generate extra cash for the reasons I described this morning and previously, we are very confident that we can drive extra free cash flow. And that extra free cash flow, if it's not being used inside the business will be returned to shareholders.

And we'll take a question from Monique Pollard from Citi.

Three questions, if I can. The first is just on the U.K. credit adoption. Obviously, that's growing really nicely, up 2.5 percentage points to 23%. Just wanted to understand whether you saw any risks there from the U.K. regulatory environment or web pay around that offering. The second question I had was on the improvement in the Nordics gross margin. Just wondered if you could give us any color on how much of that improvement is being driven by better full price realization versus the benefit to the gross margin from changes in the mix, products being sold particularly around solutions and services, I would imagine. And then the final question I had was around this sort of service care and repair offering. Obviously, that's a big competitive advantage that you have. Are you seeing any competitors next year in your performance in looking to develop more comprehensive offerings in that field of their own?

Thanks, Monique. Let me start on all three of those. So on the U.K. credit bit, you're right, is growing quite nicely up to 23% of sales in -- over peak. And that's really -- I mean, it gives good customer outcomes, and so it point to make when you come on to the regulatory environment. So the credit customer at Currys is 20 points higher in NPS than the noncredit customer, because we are lending responsibly and we're lending to fulfill a real need, which is to improve their lives through the power of technology. So of course, it's -- of course, it's good for us as well as then good for customers in terms of enabling those incremental retail sales and enabling those stickier and more valuable customers, but it just start by fulfilling a real customer need. That's very helpful. When it comes to our close relationship with the FCA and with other regulators. And we stay a mile away, Monique from regulatory risk, never mind regulatory risk, we stay a mile away from reputational risk, which is our first concern. We've got no interest in lending money to people who can't afford to pay it back. But the purpose of credit for us is as an enabler of the incremental sales and these customer relationships. So it allows us to -- allows us to offer very competitive rates to customers, first of all. So the majority of our credit customers need to pay no interest on the credit that they take for us. And even when they do it is a competitive APR rate. We're super transparent about what we lend and how we lend and the charges on that. And we work very closely with the regulators to make sure we stay a mile away from such risks. And of course, finally, we don't take any credit or forward risk at all ourselves, because all of that sits in our balance sheet. So that's the answer on credit. It is good for customers, and that's fundamentally what regulators care about as well as a big benefit to our business. On the Nordic gross margin point, we have been more disciplined not chasing less profitable sales. We've shown good discipline over peak on promotions as well as every other driver of margin. But the biggest drivers of margin, I mean, you alluded to, we're doing a better job of selling the accessories with the services and the other solutions to help customers as well as helping us. And of course, we've taken our supply chain service operations costs down in the Nordics as well as given in the U.K. And finally, kind of you to point out that our care and repair service rests on competitor advantage, of course it does, and we're really pleased with that. And a being honest with this group. I mean, there's no -- it's very hard to see us being able to invest in the capabilities that we've now got at the scale that they are if we were starting from scratch. It would be very hard to see that payback, but we've got them, and that's the point. And that's a big moat around that part of the business versus competitors, but it's not really realistic to think anyone else is going to emulate that Europe's largest repair center that we have up in Newark with the 1,000 colleagues the 3 other centers like it in -- across the Nordics. And that's why -- how we've been able to build this from repair book of over 12 million customers, good for customers' pockets, the planet and our profits, because it is based on capabilities that realistically others aren't going to emulate. I give us good marks for building that capability, but we're not satisfied. We're getting in now, we're not satisfied with the rate of adoption yet and significantly further to go in getting the message out to customers that Currys and Elkjøp are every bit as much about getting their technology that they've already got longer life as well as the selling shown in U.K.

Our next question is from Richard Chamberlain from RBC.

A couple from me, please. So on the sort of product trends, interesting in the same you called out strong mobile trends in the U.K., but it sounds like and the trends have been somewhat weaker in Nordics on the mobile side. So I just wondered how you claim the divergence there. And then in the Nordics, as I think you've explained it does sound like you're gaining share now pretty clearly. Are there any particular sort of categories or countries, I guess, you would call out where you think that the share gains are likely to be most pronounced?

Thanks for that, Richard. I think to say this peak product trends that I talked to actually work pretty well across -- read right across the group. So we didn't say, we don't mean that mobile had weaker time of it in the Nordics. That's not the case. We're quite pleased with bringing mobile sales across the group, both iPhones and Android. And one highlight of that, that we talked to is the handset only sales on our own credit were up 40% year-on-year over peak. And then we're quite pleased with that. Likewise computing, it's been a strong category right the way across the room. But it's just worth remembering, of course, that one of the reasons that this group works well together is because customer needs and the products and solutions to those needs are pretty homogenous across countries, I mean this is quite a homogenous category across borders as far as retail categories go. And we don't have the same difference in local taste and local product that you see, for example, apparel or grocery. And that enable the group to hang together pretty well, so in the AI trend in premium computing and mobile, for example, is a global one and the relationships that we've got with the likes of Intel, NVIDIA, AMD, QUALCOMM, and some silicon providers I mention like HP and Lenovo on the laptops and as software providers like Microsoft, these are group relationships that we've got. And then we benefit from the scale of the group, when we're having these conversations with customers sorry with suppliers. So mobile going well, computing going well, health, beauty and fitness going well and supersize TVs and coffee going well and that's true across the region.

Our next question is from Nick Barker from BNP Paribas Exane.

The first one is just on Nordics credit adoption. You mentioned U.K. credit adoption, but how is it progressing in the Nordics? And my second question is, I know it's generally more about the consumer at the peak. But you mentioned in the statement that B2B performed especially strongly. I was wondering if you can provide a bit more color on that what's been working well there?

Sorry. And Nick, could you just repeat the second part of your question because you break up a bit.

Sure, of course. So as I said, I know the peak trading is more about the consumer, but you mentioned in the statement that B2B performed especially strongly. Can you provide a bit of color on that? What's been working well there?

Sure. I mean, your question on Nordic first in it in the Nordics than it is in the U.K., but it's also out [Technical Difficulty] we have sometimes is one of the rollout. And I'm talking to -- this -- [Technical Difficulty] example areas, I'd like to once from U.K. and credit the other way U.K. is further ahead and the Nordics. Frederik and the team are working hard to catch up fast. So it's an improving trend in the Nordics, and we would come back at the year and give more color on that, if it's helpful. B2B, I mean, you asked that B2B. Again, this is the single number 1 grow top line growth driver across the group is true in the Nordics and it's true in the U.K. And again, the situation is very similar. The small business, and we talk about the small business, I mean, our sweet spot market is 1- to 50-seat SMEs and small rent. And we're disciplined about staying close, stay into that target market because the needs of these smaller businesses are most adjacent, if you like, most similar to the needs of consumers. And so all of the capabilities that we built for our core B2C business work with no or minimal adaptation at the smaller end of the SMB market. And by the way, this market is big. I mean it's about 18% of the size of the B2C market in the U.K., for example, and where we've got single-digit market share compared to getting on for 1/4 of the market in B2C. So it's the big market, it's accessible to us by virtue of the products, the supplier relationships, the channels and the solutions that we've already got to serve consumers. And we've built out a specialist add-on that we need to talk about. So we've got specialists in 50 stores in the U.K., for example, B2B hubs where the businesses can go to buy, to solve their as we've built out the adaptive solutions, services and solutions for these, for small businesses as well as the specialist outbound sales based out in pool and the account management or some of the larger accounts. So we built this out, and we're quite pleased with the results so far. As you said, we're coming into a peak for B2B at the moment. But even over the consumer peak, we were sort of up healthy double digits percentage sales year-on-year. And this is something that's proving itself as a growth driver for the group, and we intend to stay behind it.

We will now move to our next question from David Hughes from Shore Capital.

A couple of questions from me, please. Firstly, in terms of sales growth, are you able to give any detail about what the mix within that is in terms of underlying volume growth versus any price inflation versus any kind of AOV trading up, trading down from customers and some detail there? And then secondly, from what you've highlighted, it sounds like consumer electronics has done very well. Are you able to give any detail on what MDA has looked like over the peak period?

I mean let me answer your second question first. I mean MDA was okay over the peak period. And it's not our category is where the replacement cycle accelerating. I think the best efforts of [indiscernible] aside, obviously, the larger line section is still pretty much driven by the distressed replacement cycle and by the housing market. So as the housing market improves, so we'll see people buying more washing machines. And other than that, it's just the standard replace a broken one. It's pretty much the case on the larger appliance side. On the smaller appliance side, it's very different. This is where the advances that we've seen in our health and beauty are particularly excited and effectively expanding our TAM, our total accessible market, electrification trend hits health and beauty. We talked about the Shark beauty masks as an example of that. Customers are buying technology instead of buying premium pastry and we can expect this to be big for us in Valentine's Day and Mother's Day not just that it's toothbrushes, it's stylers, it's shavers for the likes of all, Remington, Braun and Philips, all of which went well over peak as well as fitness wearables like the Garmin Watch should be Oura Ring, both of which again are selling well. So it was a different story of peak between large and small appliances.

I'm afraid my answer is really straightforward. We don't break out volume mix and price inflation. So I'm afraid we can't help you with that.

[Operator Instructions] And our next question is from Adam Tomlinson from Berenberg.

Hopefully, you can hear me okay.

We can.

Great. So first, a couple of questions, please, on the Nordics. So obviously, great to be back in growth there in still tough markets as you point out, I suppose, are you able to give any color on the sort of consistency of that growth through the period exit rates holding up? And just how much confidence that gives you in terms of that growth continuing as we look forward into the coming months? The second question on the Nordics is just around -- you note further cost savings being achieved. And I suppose you mentioned in the past, the Nordics itself a very lean, well-run business. So I'm just interested in where you're finding those cost savings? And then the third question is on satisfaction. Great to see those internal metrics continuing to pick up. But I think that for me, the trust pilot improvement really stood out there. And obviously, being an external metric, great results. So just interested in how you think you've achieved that improvement there as well?

Yes. I mean, Adam, thanks for the questions. We don't break out trends of the level of exit rates and the like. I mean the one thing that we'll say we're pleased to have got Nordics back into growth despite no help from an weaker market during peak. We're confident of growing profits and cash flow over the year. Bruce talked about our margin aspirations and that applies of course to the at least 3% EBIT margin applies to the Nordics as well, where, of course, it's been historically. And we aim to get back to at least that prospectively. And all of this would be helped by more benign consumer environment, but we're not depending on it. I think that the track -- the team was showing there being able to produce -- putting their row of cherries on top line sales growth, market share gains, gross margins coming back to the levels of 3 years ago, really strong cost efficiency to come back to your second question in a moment at the same time as improving colleague engagement and customer satisfaction and what is really tricky environment as the performance of listed competitors would indicate. I think it's hats off to the great work the team have been doing there. So I'm not going to start forecasting where the Nordics consumer is going. I mean there is some -- the some grounds for optimism, inflation is well down to 2% or lower in the Nordics -- in the Nordic markets, but the interest rates are still stickily high in consumer confidence while trending upwards is still pretty low by historical standards. So we're not -- we don't have to cross our fingers wish for a better consumer environment. It will come in time. And the faster it comes, the better it will be for us that we can improve our performance yield without it. You asked about the cost savings, yes, they do run a pretty tight ship over the Nordics, but we've seen the same sorts of initiatives as we talked about for the U.K. benefit there. And again, we benefit from a big part of the group. Our relationship within the system continues to develop. We have 1,000 colleagues out in India now and those -- and that relationship benefits the whole of the group, Nordics as well as the U.K., you can expect to see further investments in automation as people cost rise as well as overhead a simple overhead efficiencies and, of course, continuing to drive towards greater supply chain and service operations cost efficiencies. And finally, you talked about the Trustpilot as part of our U.K. customer satisfaction improvements. Yes, thanks for the kind words. I mean the team worked very hard to continue to improve the customer experience and NPS being up 2 in the first half, up 9 year on is good, but as you say, Trustpilot is a transparent score. And candidly we weren't very good in Trustpilot, if you go back to 2020 and 2021 pandemic era, we worked hard on the customer experience. That's been rewarded with a growth from poor to excellent at 4.3% and climbing. And as I couldn't resist telling you, we've overtaken John Lewis, who are at 4.0 , but that's not some of our ambitions. I mean and I hope, thanks for giving me the opening statements Adam please don't detect any complacency in any of this because that's not how the teams would experience it ahead. I mean, yes, we're on a good track. And overall, the rig is heading in the right direction. But we're not satisfied with where we are, and we're impatient to progress faster. And we're constantly looking for ways to do so. So there's more to come from [indiscernible] .

Our next question is from Charlie Rothberg from HSBC.

Well, my sympathy. questions, Adam has once again beat me with all the interesting ones. So thought I might ask you about your changes in guidance. I suppose a GBP 20 million decrease in D&A stands out given the sort of increase in sort of the GBP 10 million increase in PBT. So could you please talk around that? And then sort of what's changed for the -- where CapEx is being spent to get below GBP 80 million and then why your cash payment of lease costs and interest is sort of down to GBP 10 million as well?

Yes. Charlie, let me tackle each of those. So first thing to say, in fact, I might take the depreciation and the lease together. So neither of those are what I would describe as new news. I mean we could have updated on those in December, we didn't. So it's not as if some major changes happened over the last 10 weeks or so. In terms of what are the drivers? Well, you need to be aware that a big chunk of that is driven by FX. Obviously, we've got depreciation costs within our Nordic business with 40% of our lease costs are within our Nordic business. And there's been quite a significant shift in the pound to not rate in the translation. And that reduces both of those numbers. So that is, let's say, just under half of the movements. From a depreciation perspective, obviously, we reduced our guidance on the level of CapEx. We did that in December and then we've done another notch down again this morning. So we are spending less. But you also might remember that I showed a slide in December that highlighted that a bigger proportion of our project spend is going into OpEx as opposed to CapEx. And that means that instead of the chart hitting us through depreciation, actually, it's going directly to the P&L. But the most important thing to say is that, that reduction in depreciation isn't in any way impacting the movements in our profitability. Then in terms of the breakout of our CapEx, again, that small notch down is really just down to timing and phasing. There isn't any material in where we're spending the money, it's largely phasing in terms of the spend that we expect to make this year.

With this, I'd like to hand the call back over to Alex for closing remarks.

Thank you all. I mean, in summary, this performance does continue to strengthen, both this first half, this peak and prospectively with improved profit guidance and the confidence and continuing to turn great cash generation here. It's pleasing to get the Nordics back on track in -- back into growth. It's pleasing to continue the encouraging momentum we've got in the U.K. We're doing all of this in the teeth of markets and the policies that aren't particularly helpful. But I think we're sharing -- showing what we can do, nonetheless, and we intend to continue doing so and as and when the consumer environment improves, we believe that we will be well placed to benefit disproportionately. So thank you very much for your attention and have a great day.