Dick Smith’s profit up

Dick Smith
Connected Home by Dick Smith

At the end of its second year trading as a public company, Dick Smith’s underlying net profit has grown 3.1 per cent to $43.4 million, which excludes $5.5 million restructuring charges.

Total sales improved 7.5 per cent to $1.3 billion for the full year ended June 30, while comparable sales for the electronics retailer were steady, rising one per cent.

In Australia, sales grew 10 per cent year on year, with 2.4 per cent Australian comparable sales growth.

The company’s New Zealand sales declined 6.9 per cent, impacted by aggressive competition pricing and a deterioration in consumer sentiment, particularly in the first half.

“We are pleased with the Australian sales performance, which was achieved in the face of an increasingly competitive environment that saw more promotional activity than the prior year. This reaffirms Dick Smith’s growth strategy is working and reinforces our ongoing commitment to providing value and convenience to our customers,” said Nick Abboud, Dick Smith CEO and MD.

“We are pleased to have delivered another solid underlying profit performance in this our second year as a listed company.”

Since implementing the Dick Smith growth strategy two and half years ago, 70 new stores have been opened, including 14 Dick Smith stores and six Move stores in FY15, taking the total number of stores to 393 in Australia and New Zealand.

The company aims to reach between 420 and 430 stores by FY17.

“We continue to deliver sales growth and gain market share. Recent independent industry data from GfK indicates that Dick Smith gained 60bp of share in FY2015, with gains of a percentage point or more in our core categories. This is testimony to the success of our growth strategy and our successful approach to improving our brand and pricing perception in the marketplace,” Abboud said.

Now with 10 stores, including within Sydney Airport, the company reported its ‘fashtronics’ retail concept, Move, is experiencing strong comparative sales growth, consistent with internal expectations.

“After four months trading, duty free sales and contribution continue to exceed our initial expectations. We are confident of further improvement when we relocated the main store from our temporary position, to a high traffic permanent site in December. We see Move by Dick Smith as strong growth opportunity during the next few years,” Abboud said.

Operating within David Jones stores, Electronics Powered by Dick Smith was impacted by the closure of two stores and relocations of a number of stores, with sales representing approximately 3 per cent of the company sales, at a lower than average margin.

The company stated changes to improve performance are expected to be implemented before Christmas.

Online sales increased to eight per cent of total retail sales, on track to make up 10 per cent of retail sales by FY17.

Currently half of the items purchase online are picked up instore.

Dick Smith’s private label business, Dick Smith and Move-branded products, has grown to 12 per cent of sales.

This week the retailer entered the small appliance category, ranging kitchen, floorcare, and personal care products in its Sydney George St store.

By FY16, 100 Dick Smith stores will feature the ‘Connected Home by Dick Smith’.

Dick Smith is forecasting an NPAT between $45 million and $48 million in FY16.

Read more about Dick Smith’s strategy in the latest issue of Inside Retail Weekly out this week. 

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