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Dick Smith slows sales decline after shifting some functions to Australia, outsourcing

Dick Smith Holdings [ASX: DSH], the electronics retailer that went public last December, says it slowed the rate of sales decline at its New Zealand stores after shifting some support functions to Australia and outsourcing deliveries.

The ASX-listed retailer posted what it called like-for-like sales, stripping out some items. New Zealand sales fell 18.8 percent to NZ$44.9 million in the third quarter, or a decline of 5.6 percent to A$138.4 million in Australian dollar terms, it said in a statement. That was an improvement from the 26.8 percent, or 18 percent decline respectively in the second quarter, it said.

During the latest quarter Dick Smith shifted its New Zealand marketing and buying operations to Australia, "leveraging our Australian buying power," and outsourced deliveries to NZ Post, allowing the company to cut 32 jobs.

Dick Smith's prospectus last year described 2014 as a transition year for its 61 New Zealand stores, which would lead to "a significant improvement in New Zealand Ebitda despite a decline in like-for-like sales."

Changes to the business were expected to widen gross margin and improve the cost of doing business, and included "a new pricing structure, improved vendor terms, store productivity improvements and marketing methodology," the initial public offering document said.

Total sales in Australia and New Zealand rose 1 percent to A$280.1 million on the same basis. Dick Smith is the largest retailer of electronic goods in Australasia, with a total 359 stores, compared with JB Hi-Fi's 177 and Harvey Norman's 239. The total market is worth up to A$12 billion, according to its prospectus.

The company affirmed its pro forma forecast for the full 2014 year, assuming no change in consumer or market conditions, it said today.

New Zealand government figures released with the consumers price index this week showed retailers of audio-visual and computing equipment discounted 22 percent of their prices in the first quarter, unchanged from three months earlier.

Shares of Dick Smith rose 0.9 percent to A$2.22 on the ASX, having been sold in the IPO at A$2.20.

(BusinessDesk)

Comments and questions
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Food company Heinz is threatening to sue Australian entrepreneur Dick Smith over claims he has made about New Zealand beetroot. Smith has taken aim at what he considers an inferior imported product, on tins of his own sliced beetroot sold in his Australian stores.
http://tvnz.co.nz/business-news/heinz-threatens-dick-smith-over-nz-beetroot-claims-5341232

In Australia, no specific law governs comparative advertising although certain cases regarding this matter have occurred. Comparative advertising that is truthful, and does not lead to confusion is permitted. http://en.wikipedia.org/wiki/Comparative_advertising#Australia
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