Woolworths guns for CE No.1 spot

By Chris Nicholls

SYDNEY: Woolworths has announced it wants to take its Dick Smith’s consumer electronics retailer to number one in CE retailing in Australia, with a strategic review of the business to be conducted similar to the successful Big W re-vamp.

Speaking at a press conference to announce the company’s half yearly results to 30 December 2007, Woolworths chief executive Michael Luscombe said Woolworths wanted to bring the Dick Smith business up to the level of their other chains.

“We realise that we’re not leading in this business, unlike every other business that we have, where we are market leader or close to number two. We have an aim in this business to gain that position, so we are undergoing a strategic review of the Dick Smith business, very much in the same vein as we did with Big W, and over the next 18 months, you can expect to see some significant ticket changes in Dick Smith.”

The company would also move away from its traditional electric parts, delivering them “through a different channel,” Luscombe said. He would not elaborate whether this meant opening a new chain to sell these parts, though.

“What we’ve been famous for for many, many years have been a lot of the bibs and bobs – cables, etc. – we will still have them available, but we won’t necessarily have the full range in every store, going forward.”

Total sales for the various consumer electronics stores in the group rose 10.1 per cent to $769 million. Gross margins were also up, rising eight basis points, which Luscombe described as a “a good result, considering the high price inflation that we have in this business.”

Luscombe also said small appliance sales had also met their expectations since their introduction in the Powerhouse stores in 2005. However, as with all products in all their chains, the products would come under review. 

Regardless of review plans, Dick Smith will add 21 stores in the second half of the year, adding to the 24 they opened in the first half. However, cost of doing business rose 30 basis points due to the increased store openings.

Dick Smiths EBIT increased 5.9 per cent, while the Indian Croma stores reported $46 million in sales, but booked a $2.3 million operating loss.

Woolworths’ overall sales rose 8.6 per cent to $24 billion, with EBIT up 20 per cent to $1.37 billion.

Big W also posted double digit growth, with sales up 13,1 per cent to $2.1 billion. 

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