By Claire Reilly

Woolworths Limited released its half-yearly results for the first half of fiscal 2011-12 today, with grim profit figures for the embattled Dick Smith chain painting a clearer picture of why Woolworths is exiting specialty consumer electronics retailing.

Woolworths announced last month that it was looking to divest the Dick Smith business, and in today’s sales results, the parent company outlined the costing for this decision.

“We accelerated the review of Dick Smith, culminating in a decision to restructure and divest the business, with a $300 million provision taken in the first half of FY12,” the results report read. “The amount of this provision was determined by reference to the fair value less costs to sell of [sic] the business.

"The sale process is underway with pleasing interest from prospective purchasers.”

Aside from this $300 million "provision and impairment loss" figure, closer analysis of Dick Smith’s sales figures reveals just how poorly the retailer has been performing in recent times.

Over the 27 weeks ended 1 January 2012, Dick Smith brought in $13.8 million profit after tax (before the $300 million “loss on re-measurement”). That equates to Dick Smith’s 384 retail stores and 2 wholesale stores bringing in a profit of approximately $35,750 over the period, or just $189 per day.

Click here to sign up for our FREE daily newsletter
Follow Current.com.au on Twitter

While Woolworths described Dick Smith as a “non-core” element of its business, store numbers for the CE retailer are more than double those for the Big W chain across Australia, with Dick Smith representing more than 10 per cent of the Woolworths business (in terms of non-wholesale store numbers).

However, Dick Smith's earnings before interest and tax (EBIT) for the half-year stood at just $19.5 million, compared to the Group EBIT of $1.85 billion. While Dick Smith made up 10 per cent of Woolworths' footprint in stores, the CE retailer pulled in just 1 per cent of the group's total earnings.

It's little wonder, then, that Woolworths is looking to excise Dick Smith from its larger body of retail businesses. As Woolworths Limited's CEO Grant O'Brien said just one month ago, "separating this speciality model from Woolworths is now the best option for the future of both businesses".

According to the profit announcement released today, “the Dick Smith Australian and New Zealand operations have been classified as a discontinued operation at 1 January 2012”.