Dick Smith growth slows, more pain to come

By Chris Nicholls

SYDNEY: Woolworths has reported strong results for the year ending 30 June, with a 25.7 per cent rise in net profit, but has posted modest sales for Dick Smith Electronics and forecast slower sales for this year.

In its report to the market, Woolworths said sales rose 10.7 per cent to $47 billion, while net profit after tax (NPAT) came in at $1.63 billion. Cost of doing business fell 0.43 per cent for the year to 19.92 per cent.

Sales in its Dick Smith Electronics branch increased 11.1 per cent to $1.43 billion, but gross margin fell 0.72 per cent to $27.49 million.

Profit for the consumer electronics group was not made public.

Woolworths said business overall had performed well, but said the Dick Smith result was “modest” in a “very competitive market”.

The company also put some of the numbers down to reinvestment in the company through refurbishments.

“The strategic review of our consumer electronics business is focussed on repositioning of the brands, engaging our customers with a new in-store experience and introducing new product and service offerings,” said Woolworths in a presentation to the market.

It said it had seen “excellent results” from its trial refurbishment stores to date.

Woolworths’ tie-up with Tata in India for its Croma-branded consumer electronics stores grew almost exponentially, with sales of $104 million for FY08, compared with $25 million in FY07, but the fledgling business still lost $5 million this year.

While sales for the group may be up this year, though, Woolworths posted a somewhat gloomy forecast, saying sales growth would slow to single digit figures this financial year.

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