Growth strategy pays off for Dick Smith with better-than-expected financial results

Dick Smith managing director and CEO Nick Abboud said the company’s transformation over the past 18 months is paying off, reporting an increase in sales driven by opening new stores, embracing omnichannel retail and an increased focus on private label products.

In Dick Smith’s first full year financial results released today, the company reported a pro forma net profit after tax (NPAT) of $42.1 million, 5.3 per cent better than its prospectus forecast.

Total sales grew 4.2 per cent and Australian sales grew 7.8 per cent in FY14, with like-for-like Australian sales growth of 0.8 per cent. The second half of FY14 boosted the company’s results, with total sales growth of 9.5 per cent, led by Australian sales growth of 13.6 per cent and Australian H2 FY14 like-for-like sales up 3.2 per cent.

“The strength and quality of the result is testimony to the successful and significant transformation the Dick Smith business has undertaken during the past 18 months. We have stayed focused on our core growth strategy which includes new stores and store formats, a compelling omnichannel offer, private label and accessories. This continues to drive customer engagement,” Abboud said.

Private label sales currently account for 11.5 per cent of its sales, and the company has plans to expand private label range by 40 per cent, including in new categories of pet care, baby monitors, tablets and security.

“Private label continues to offer a point of differentiation for our customers. It now represents over 11.5 per cent of company sales and is well on its way to achieving our target of 15 per cent of sales,” Abboud said.

During the past financial year, Dick Smith opened 21 Dick Smith stores, four Move stores and commenced managing the David Jones’ electronics department, operating 29 David Jones Electronics Powered by Dick Smith stores.

A further 20 new stores are expected to open in FY15, with the opening of 13 stores confirmed so far. At last count Dick Smith had 377 stores across Australia (283 Dick Smith, four Move and 29 David Jones Electronics Powered by Dick Smith) and 61 Dick Smith stores in  New Zealand.

“We are very pleased with the initial performance of our two new formats. Catering for a diverse demographic not fully serviced by Dick Smith stores, Move and David Jones complement our market leading network of Dick Smith stores,” Abboud said.

“Our Move stores continue to be recognised as one of the most innovative retail formats globally. More satisfying is our customers’ adoption of the concept that fashion and electronics can coincide and integrate in technologically functional fashion products.”

A new transactional Move website is planned for the coming year, increasing the company’s omnichannel capabilities, which Abboud identified as a “significant highlight” during the year.

Dick Smith significantly expanded its online platforms and offers during the second half of the year into Westfield, eBay and Catch of the Day, and online sales grew 55 per cent to represent more than 4 per cent of total retail sales. This figure is predicted to reach 10 per cent by 2017.

“This expansion, combined with our existing websites and online capability, gives us a wide‐ranging omnichannel offer and allows us to compete strongly with pure online retailers,” Abboud said.

As of June 2014, more than 60 stores could fulfil online orders providing quicker and cheaper local delivery, in addition to the Click & Collect capability of the company’s 377 stores.

The company will introduce Pay & Collect in August, the evolution of the Click & Collect offer, which will enable customers to pay online and collect, at their convenience, from their local Dick Smith store.

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