Despite a sales hike of 6.9% and an increase of 1.3% in comparable sales, Dick Smith has cut its full-year profit guidance by $5 to $8 million, plunging company shares by up to 30%. In a company statement, managing director and CEO, Nick Abboud described sales as “disappointing” in the tablet and gaming category, despite strong sales growth for phones and fitness products. Gross profit was adversely affected by promotional activity and an unfavourable product mix.
Channel mix was also negative, with strong online sales growth offsetting softer retail store sales.
“Sales for the first quarter have improved on the prior year and last quarter, with New Zealand experiencing its best quarterly sales performance since acquisition,” Abboud said.
“Given the October performance and expectations of challenging and variable market conditions, we are cautious about the outlook for the all-important Christmas trading period. We will continue to drive sales growth and protect market share, including the launch of the ‘Dick Smith Live Daily Deals’ campaign on television and radio this week to drive foot traffic,” he added.
The company anticipates FY2016 NPAT could be $5 million to $8 million below previous guidance of $45 million to $48 million.