Rampant discounting going into the Christmas season in the TV sector has had an impact on Dick Smith results. While the company achieved a sales increase of 6.5 percent, margins suffered. Sales for Big W fell at the discounting outlet.
Retail giant Woolworth – who owns Dick Smith and Big W, has just released its sales stats which have shown a rise of 4 percent, totalling $28.3 billion for the group.
Total consumer electronics sales in Australia, NZ and India accounted for $1.045m of this figure – up 6.2 per cent from this time last year.
Earnings (EBITDA) also jumped 6.6 percent at the group for the first half of 2011 financial year. Net profit after tax rose 6 per cent.
Dick Smith sales grew 6.5 per cent, with total sales for consumer electronics in Australia at $726m – compared to $710m for the previous half 2010 – a rise of 2.3 per cent.
However, gross margin at Dick Smith fell by 1.15 per cent – from 27.50 to 26.35 as price competition intensifies for the sector.
Computers, LCD TVs and navigating systems were all cited as strongly performing sectors for the stores, who are “transitioning to a modern computer electronics business,” it said.
Dick Smith’s laptop and tablet markets were also singled out for their “strong growth through more competitive pricing, new improved range and presentation,” the company said in the statement released this morning.
Woolworths cited discount store Big W electronics division as returning strong growth grew due to the introduction of Apple products including iPod, iPad and accessories, although overall sales fell at the discounting outlet.
Sales for Big W for HY11 was $2.392m – a fall of 2.8 per cent compared to $2.462m for the previous period last year, which they attributed to “lower customer spending and subdued sales” due to the adverse weather.
Gross margins rose slightly to 29.52 per cent – from 29.07 per cent.
Price deflation in home entertainment and the strong Ausssie dollar were also mitigating factors to rising profits, the company said.
Their “techxpert” service in Dick Smith stores offering continued to “add value in a category that has fierce price deflation and competition” and said their new format stores were strongly received by customers.
Gaming and mobile phone division were also strong performers at Dick Smiths stores.
However, Dick Smith also reported “strong customer trading” online, an issue which has been a hot topic in the retail sector of late.
Online sales for the group as a whole rose a whopping 75 percent and the group plan further growth via the web.
Big W online offering which was set up in May last year was also performing well, Woolworths said.
“Shopping online has become an increasingly important part of the Woolworths business with strategies developing across all trading divisions.”
“We will continue to invest strongly in this rapidly growing channel to drive incremental sale sand profitability,” said the retailing giant, who plan to place their Dan Murphy alcohol outlets online division from next March.
Woolworths last month admitted that their consumer electronics business was experiencing weaker than expected results despite increased sales.
Dick Smith business is currently being re-positioned and have unveiled several new “transformation” stores.
These figures give a broad indication of the health of the retail sector in Australia given the vast number of stores operating under the Woolworths umbrella.