Mobiles, Tabs Drive Dick’s Sales, “More Upside” FY15
Dick Smith outperformed the market on notebook, tablet and hardware sales in FY14, although cameras were not as snap happy.
A relative newcomer to mobility – and following its recent partnership with Vodafone selling post paid and 4G devices, mobility was one of its key sales drivers in FY14, Dick Smith CEO Nick Abboud said today as it announced stellar profits in a “tough” market.
Total ANZ sales rose 4.2% to $1.2 bn although Dick Smith’s Australian stores were the main driver especially in second half. NPAT also lifted 5.3% to $41.2 million during the past 12 months, smashing forecasts, as did earnings.
Read: Dick Smith Beats Guidance
Private label, computers and accessories were also big movers during the 12 months for the retailer who went public last year and revamped its entire store format, supply chain and image from head to toe, including opening new Move ‘fashtronics’ stores, selling everything from plush fitness bands to design-your-own iPhone cases.
Computer sales hiked during 2014 financial year to 29 June with notebook, tablet and computer hardware sales all rising higher than the total market.
Tablet demand alone grew 30% from Q2 to Q4, while notebooks experienced an astonishing comeback – up almost 60% by Q4 last, from negative growth at the beginning of the financial year.
However, the store plans to ‘de-emphasise’ cameras and car navigation gear, both of which have fallen into negative growth – camera sales slid 60% by Q3 and remained in negative territory during all of FY14.
Abboud plans to focus on mobility, accessories including fitness and computers in Fy15.
The retailer is upping private label stock to 40% by the end of the year and aims to grow sales to 15%. It currently stands at 11.5% of sales but higher margins make own brands particularly attractive to retailers.
Fy 14 online sales rose 55% to 4% as Dick Smith’s web presence grows on a matrix of platforms – Catch of The Day, eBay stores as well as its standalone website, which runs daily deals and low price offers.
It hopes to grow online sales to 10% of total by 2017. The retailer’s “extended customer base has yet to be fully explored,” according to an investor statement, as its drives online fulfilment to 100 stores by year end.
This gives Dick Smith an advantage versus the market, Abboud said.
Dick Smith will open at 20 new locations this year including Airlie Beach, Qld, Goldburn and Merrylands in NSW, as well as new Move stores in Macquarie and Southland in Victoria. 10 of these will be open by Christmas and aims to have 450 stores open in three years time – up from 377.
Abboud predicts good times ahead for FY15, forecasting “more upside this year and beyond.”
The retailer recorded “low double digit” sales growth in first weeks of FY 2015 and LFL sales grew almost 2%.
The 10 new store openings will sustain growth momentum to Christmas.
The partnership with David Jones has also come under the spotlight as the retailer is now under new ownership, South African based Woolworths.
However, Abboud denied store performance in DJ’s was suffering, despite holding monthly performance meeting with DJ’s senior management, and said LFL weekly sales doubled in FY14 Q4 compared to a year ago when the first David Jones powered by Dick Smith stores opened.
There was improved underlying performance and the 29 stores performed “in line with expectations.”
Former owners Anchorage Capital has appointed Macquarie Capital as advisors in relation to its remaining stake in Dick Smith, meaning it will sell off its 20% share in the not so distant future.