Dick Smith And Big W Struggle With Consumer Electronics

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Woolworths has admitted that their consumer electronics business which consists primarily of Dick Smith and Big W stores is experiencing weaker than expected results despite increased sales.


Earlier today the Woolworth’s Group said that net profit after tax was expected to grow between 8 and 11%. 

Solid performances in Food and Liquor, Petrol, New Zealand Supermarkets and Hotels, met the Companies expectations but not consumer electronic which appears to be the worst performing area of Woolworths business. 
In a report issued to the ASX today Woolworths said that while BIG W had produced a solid EBIT for the first half it is expected to be below last year’s first half result. 

Woolworths said that their Dick Smith business is currently being re-positioned and while their old Dick stores were not performing as well their new “transformation” stores. 

“The strong price investment combined with significant price deflation in consumer electronics products generally, which has been exacerbated by the strong Australian dollar; and the weak performance of the old Dick Smith format stores and New Zealand, has provided a lower than expected EBIT result for the period” Woolworths reported.

They also reported that the EBIT result was lower than our expected. Woolworths’ Big W general merchandise division saw sales fall by 2.9 per cent, while in its consumer electronics division, sales were up 8 per cent. 
Overall Woolworths has downgraded its full-year earnings guidance, as fiscal second-quarter sales rose 4 per cent from a year earlier.

 


The company said it has revised its full-year earnings guidance of net profit growth in the range of 5 per cent-8 per cent, down from its previous guidance of growth of between 8 per cent-11 per cent. 

The grocery and general-merchandise retailer cited concerns about consumer confidence levels, inflation, interest rates and global economic conditions, as well as incurring costs associated with the recent New Zealand earthquakes and Australian floods. 

Total sales for the 13 weeks to January 2 rose to $14.39 billion from $13.84bn a year earlier, Woolworths said in a statement. 
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