Dick Smith, Profits + Sales Up Anchorage To Bail Move To More House Brands
Tech retailer’s 2014 net profit (NPAT) was $42.1m for the 52 weeks to 29 June – six times stronger than FY13. The result was 5.3% above forecasts, Dick Smith said today.
Dick Smith’s FY14 sales performance was also stellar – total sales grew 4.2% to $1,227.6m driven by its Australian stores despite tough market conditions, especially in H2.
The retailer is upping private label stock to 40% by the end of the year and aims to grow own brand sales to 15%. It currently stands at 11.5% but higher margins make own brands particularly attractive.
Australian store sales grew almost 8% during the year, with like-for-like (LFL) sales up 0.8%. Office and mobility categories drove sales, said CEO Nick Abboud.
However, the retailer saw an upturn in the second half, driven by its Australian stores. Total sales rose almost 10%, while Aussie sales rose 13.6% and LFL sales were also higher.
Online sales rose to under 5% of total sales, which is larger than rivals Harvey Norman and JB H-Fi.
Dick’s NZ operation was “highly profitable” with operational transformation benefits still flowing through, according to an investor presentation.
FY14 EBITDA was three times higher than FY13 at $74.4m. and earnings rose 3.6% above forecasts, despite “challenging” market conditions. The retailer’s high-low pricing strategy helped achieve these figures, said Abboud.
“We are pleased to have delivered strong growth across all aspects of the business. Particularly pleasing is the improving trend in Australian sales during the year, with growth accelerating from 2.4% in Q1 to 3.3% in Q2, 11.7% in Q3 and 15.4% in Q4.”
“We’re in a fairly good position with no debt,” he added.
Dick Smith opened 54 new stores in Fy14 and forsees 20 stores opening in FY15. There are currently 377 store in the store network across ANZ.
Abboud attributed the growth to its “extensive range of products at competitive prices and leveraging our multiple omni-channel platforms”, new stores and store formats, private label and accessories.
“The benefits of this strategy are being realised, with strong sales growth in FY14, particularly in the last quarter, continuing into FY15.”
Mobility and computer hardware demand grew over 50%. Dick Smith’s private label continues now represents 11.5% of sales. All three will drive sales in FY15, said Abboud. The listed retailer is also aiming to double online sales to 10%.
The tech retailer also enjoying “good momentum” in its store network inside David Jones stores.
DS balance sheet is also in good shape. Gross margin improved 140bp to 25.1% in the year (FY13: 23.7%) and the cost of doing business (CODB) improved 290bp to 19%, thanks to supply chain improvements.
The Directors have declared a final dividend of 8 cents per share, fully franked, to be paid on 21 October 2014.