Dick Smith In Trouble, JB Hi-Fi ‘Star’ Player: Analysts

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Dick Smith are in trouble but JB’s gets a golden star. That’s according to the latest assement by analysts Merrill Lynch on leading tech retailers. And its a real dogs breakfast.

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The report handpicked Dick Smith owned by Woolworths,  as a retailer suffering from severe underperformance ”to a degree no players would have anticipated.”

It has gone hell for leather invested $80m in repositioning the stores over the past two years but to no avail.

And according to a separate report from Woolies out today, it appears not to be planning any further store openings but cited Dick Smith among its brand’s that “engender loyalty underpinning sales volume.”

But store closures would result in further losses at the hands of competitors like JB Hi-Fi, analysts believe.

JB Hi-Fi was picked as Merrill’s ”bright light” in a difficult retail environment with new store openings, and is now fast gaining on rivals.

”If the Dick Smith business were to be rationalised or consolidated with Big W, wincreased consumer caution and higher domestic savings rates would expect this to further strengthen (JB Hi-Fi’s) position as the market leader,” the report warned, according to SMH.

DS reported 7.1% rise in comparable for the full year to June 26, which it confirmed was thanks to new format stores grow sales at a greater rate than the older sites.

But according to Merril Lynch, this isn’t the full picture – depite sales growth of about 20% or $325m since 2009, profits slumped by a whopping 60% or $36m.

And poor Harvey Norman appears not to be doing too well either, according to analysts, saying its’ marketshare has dived in the past year.

 

But Woolies CEO himself admitted woes in June result announcement, talking about price deflation, increased consumer caution and higher domestic savings rates.

“This result has been achieved in a very challenging year for retail,” he added, although warned the year ahead would “not be a walk in the park” either. Woolworths Limited Chief Executive Officer, Michael Luscomb said.

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