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

Dick Smith Store in New Zealand
Dick Smith 12-month price history (ASX.com)

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)

This article is tagged with the following keywords. Find out more about My Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7850 0.0000 0.00%
AUD 0.8924 0.0000 0.00%
EUR 0.6196 0.0000 0.00%
GBP 0.4880 0.0000 0.00%
HKD 6.0917 0.0000 0.00%
JPY 84.8970 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1231.3 2.700 2014-10-24T00:
Oil Brent 86.1 -0.700 2014-10-24T00:
Oil Nymex 81.0 -1.020 2014-10-24T00:
Silver Index 17.1 0.020 2014-10-24T00:

Indices

Symbol Open High Last %
NZX 50 5292.8 5344.4 5292.8 0.77%
NASDAQ 4459.5 4486.3 4452.8 0.69%
DAX 9008.6 9044.9 9047.3 -0.66%
DJI 16677.0 16811.7 16677.9 0.76%
FTSE 6419.1 6419.1 6419.1 -0.47%
HKSE 23311.9 23352.6 23333.2 -0.13%
NI225 15354.4 15377.0 15139.0 1.01%