Dick Smith Up 15%, Beats Forecasts
Dick Smith today announced pro forma sales of $1,22 billion for the year to 29 June 2014 (FY14) beating its guidance provided in November.
The listed retailer enjoyed a strong lift in its Australian stores, with Q4 sales increasing over 15%, it said today. Like-for-like sales grew 4%. It also reaffirmed its NPAT guidance of $40 million for FY14.
“This [sales rise] was achieved despite encountering challenging trading conditions, including further deterioration in Australian consumer sentiment, which has declined steadily since the Prospectus,” says Michael Potts, Dick Smith Company Secretary.
Online sales account for 5% of total purchases and are fast growing to 10%, greater than rivals Harvey Norman and JB Hi-Fi.
The retailer attributed the success to its omni-channel strategy, including its savvy website plastered with price specials, eBay store and ‘catch of the day’ offers, and demand for private label products, which now accounts for 11% of total sales.
Dick has grown its store count by 54 from a year ago. It now has 283 own branded stores – and 29 ‘Dick Smith powered by David Jones’ (29) and 4 Move locations.
CEO Nick Abouud today said there is potential for up to 450 stores. 20 new stores are earmarked to open in FY15 alone.
Its stores inside David Jones are doing a massive trade – up 80% compared to October 2013 and have “good momentum going into 2015” according to Dick Smith investor presentation.
The retailer anticipates $2 million annual sales in Move’s modest 160sqm trading footprint. The ‘fashtronics’ chain may open in as many as 30 locations nationally, in the future and the “unique ‘fashtronics’ concept [is] earning attention world-wide”.
It will move online next year, shipping worldwide.
Mobility especially post-paid is the key focus for FY15 for Dick Smith, says Abouud, as well as new categories including fitness, lights and coffee machines. Just last week, the retailer announced a retail deal with Vodafone and will sell post-paid mobile devices for the first time. It is also believed to be talking to other telco’s.
The retailer expects sales growth from new store openings and new products lines. It is hoping to expand mobility sales by 50%.
Dick Smith reaffirms its pro forma profit forecasts for FY2014, earnings (EBITDA) of $71.8m and net profit of $40m.
“Dick Smith’s strong offers continue to resonate well with our customers and, combined with our trading capability, have allowed us to exceed our expectations of improved sales performance, particularly in the fourth quarter,” said Potts.
Earnings (EBITDA) margin expansion of 7-8% is expected within 3 years.
The retailer will report its full 2014 results on 19 August.
Shares rose 2.3% today to $1.97.