‘Transformed’ Dick Smith Profits Hit $25m
Newly listed Dick Smith (DSH) today announced H1 2014 sales hit $637m or 52% of FY14 forecast for the 26 weeks to 29 December 2013.
Pro forma EBITDA were $41.7 million, and exceeded the company’s H1 2014 forecast by 4%. Net profit (NPAT) for first half was $25 million or 63% of the forecasted $40m for FY2014.
DSH reported EBITDA margin of 6.6% and gross margin of 25.3%.
It opened 46 stores in H1 alone including 30 David Jones Powered by Dick Smith, and plans to open three new Move “fashtronics” locations, seven new Dick Smith’s and close three in H2, including Narellan and Werribee.
Dick Smith now has 396 stores in ANZ, and plans to have 376 by FY14, including Move and David Jones.
Online sales accounted for 3.3% of total sales, with the ‘click and collect’ option up 50%.
Like-for-like sales fell 1.3% in Australia, reflecting underlying discounting experienced in H1 2013, but fell 26% in NZ.
Dick Smith CEO, Nick Abboud, said strong focus and higher margin own brand label drove sales, and today’sresult is testimony to the significant transformation the retailer has undertaken during the past year.
“A strong focus on sales, gross margin and reducing the cost of doing business drove our strong pro forma operating result.”
“Dick Smith’s range of private label and global brands enabled us to achieve our sales expectations without compromising our gross margin.”
Store growth, the acquisition of David Jones’ electrical depts, a strong focus on core categories including accessories and operational efficiencies all contributed to the result.
“With our key profit metrics exceeding our Prospectus pro forma forecasts, highlighted by a 20 basis point improvement in gross margin to 25.3% and pro forma EBITDA at 6.6% of sales for the half, this is an excellent operating result.”
|We continue to adapt our business in line with customer expectations and to meet current and future challenges, he said.
Dick Smith was bought by Anchorage Capital off Woolworths for $20m (plus a further $74m to cut Woolies out of pocketing future sale proceeds) in 2012 and went public late last year, forecasting a six fold jump in profits for FY14 in its prospectus, which many doubted would be achieved in a hugely competitive electronics market.
Abboud says the retailer is ‘well placed’ to meet full year forecasts of $40m NPAT, and anticipates “further benefits” from expanded store footprint.
The retailer says it is in a strong financial position with no debt, an improvement in inventory at the end of the half year.