Dick Smith fights back

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Tuesday, February 25, 2014

Electronics retailers have been under steady assault for a number of years now, thanks to online merchants that offer identical products without dealing with the overhead of brick-and-mortar facilities and employee training that can drag down profit margins.

Making matters worse is the practice of “show rooming,” where customers visit a retail store to get the hands-on experience of a product, ask questions of sales personnel, all the while using their smart phones to locate a lower price.

It was gratifying, therefore, to see that Dick Smith Electronics has started strongly as a publicly traded company on the ASX on 4 December of the past year (ASX symbol DSH).

The company reported sales of $637 million with $41.7 million of that being net profit. Those figures are for the company’s first six months of its fiscal year.

These revenue figures indicate that Dick Smith has surpassed its financial targets in terms of sales goals, earnings and profits.

Further expansion is on the horizon as well. Plans over the immediate future are for 46 new stores to be opened, 15 of the flagship brand Dick Smith format, another 30 of the David Jones variety and one Move concept store. If things go well, another 11 stores will be opened in the second half of the fiscal year.

The allegiance with David Jones has been the primary driver of success for the corporation, a partnership that is in its relative infancy, having begun just this past October.

Expenditures for converting stores, re-branding and employee training are apparently bearing fruit, at least in the early going.

Whether or not Dick Smith Electronics in combination with David Jones can continue to post results beyond projections in the months and years ahead, and whether or not the chain can withstand the erosion that e-tailers have inflicted on retailers in general and electronics merchants in particular will be revealed further on in time.

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