Dick Smith exceeds expectations with $25m profit from $637m sales

After listing on the Australian Securities Exchange (ASX) at the end of last year, Dick Smith has released its results for the first half of the 2014 financial year, posting better than expected sales, earnings and profit figures.

The company saw sales of $637 million for the half year, earnings of $41.7 million and a net profit after tax of $25 million. When compared to the figures forecast in Dick Smith’s prospectus (released on 21 November in advance of its public offering on the ASX), sales for the half exceeded expectations by 4 per cent.

Measured against the company’s financial targets for the full year, made in last year’s prospectus, Dick Smith has reached 52 per cent of its sales goal for the year in the past 6 months, as well as 58 per cent of its earnings goal and 63 per cent of forecast profits. Today’s results are described as pro forma, meaning that while they’re an accurate indication of the company’s performance, they aren’t made up of previously listed figures (the company floated on the ASX mid way through 1H2014 and does not have year-on-year listed results to compare).

The figures are positive for a new-look company that has had a major change of direction in recent years. After struggling under former owner Woolworths Limited, Dick Smith was purchased by private equity firm Anchorage Capital Partners in September 2012 and turned around it a publicly traded company in just over a year.

Speak about the company’s maiden ASX performance, Dick Smith CEO Nick Abboud said the results were driven by “a strong focus on sales, gross margin and reducing the cost of doing business” as well as new store openings and a greater mix of own-brand products.

With our key profit metrics exceeding our Prospectus pro forma forecasts…this is an excellent operating result.

Dick Smith’s range of private label and global brands enabled us to achieve our sales expectations without compromising our gross margin.

The 1H2014 pro forma result is testimony to the significant transformation Dick Smith has undertaken during the past year. We continue to adapt our business in line with customer expectations and to meet current and future challenges.

The commencement of store growth for Dick Smith, the acquisition of David Jones’ electrical department, the introduction of a new consumer electronics retailer concept in Move, a strong focus on our core categories including private label and accessories and considerable improvements in supplier relationships and operational efficiencies all contributed to the result.

The company has expanded its bricks and mortar presence — largely driven by its push into David Jones stores — with 15 new Dick Smith stores and 30 David Jones openings, as well as one Move concept store. The company also called out its online business for recognition, with online sales growing to account for 3.3 per cent of total sales. Of these, ‘Click and Collect’ sales grew by more than 50 per cent year-on-year, and they now account for one third of Dick Smith’s online sales.

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