Electronics chain Dick Smith has been engaging in rampant discounting with the Company offering 10% off Apple devices in an effort to lure consumers into their stores.
One major retailer said “There is not 10% margin in Apple products and it appears that Dick Smith is using the discounting of popular brands to lure customers, this is an expensive exercise. This is not a one off exercise, the Company has run several key discount promotions and this will be costing them serious money”.
It is widely tipped that Anchorage Capital the owners of the Dick Smith Stores will launch capital float in an effort to raise $600 million as early as Christmas however analysts that ChannelNews has spoken to said that most investors are skeptical about retail invests in light of the economy and that a float after Xmas would allow for a “clearer” analysis of their revenues and profitability.
Recently the Company claimed that sales at their new Move stores have exceeded expectations with the group now working on rolling out 30 of the new stores across Australia.
What is not known is how investors and analysts will view the new chain as Anchorage Capital owners of Dick Smith and the new Move chain get set to float the new Company.
One retail analyst said “The jury is out, let’s see what numbers Dick Smith and Move deliver this quarter as these numbers will indicate whether the group has momentum over Harvey Norman and JB Hi Fi”.
Dick Smith chief executive Nick Abboud has chosen a unique approach on one side he has the Dick Smith chain which has been repositioned as the “house of brands” that sells to a more traditional family target audience.
On the other side he has a single Move store at Westfield Bondi that is “upmarket” and designed to appeal to a younger male and female target audience whose lives are based around high-end technology and fashion.
In the middle are the 30 Dick Smith stores that are housed inside David Jones department stores.
”It’s an important part of having the three streams of customers,” Mr Abboud said recently ”We have the Dick Smith customer, the David Jones customer and the Move customer.
Tagged by some retail insiders as ”fash-tronics”, or technology with style, Move is a small-format store that is expected to appeal to younger shoppers who are looking for functionality but also like to make a fashion statement with mobile and technology accessories.
It is expected the second Move store will open in Melbourne’s Emporium shopping Centre.
Dick Smith rang up pre-tax earnings of $80 million in the year to June, more than double the $36 million reaped in its last year under Woolworths’ control.