Woolworths Struggle With Consumer Electronics Sales

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Woolworths, owners of the Dick Smith, Powerhouse and Tandy stores, as well as Big W, who are trying to compete the discount end of the consumer electronics market, have reported below average sales of consumer goods despite an increase in marketing expenditure.

Overall Big W, who kicked off 2010 selling discounted flat panel TVs and 50 inch plasma for below $1,000 has seen a sales decline of 9.2 per cent. 
Overall consumer electronic sales for the full year were $1.5 billion, a 0.5 per cent decrease on the previous year.
Sales at Dick Smith which were down 0.5 per cent were “patchy” according to observers who are waiting to see what JB Hi Fi will report.  
The Dick Smith division, which has spent the last 12 months remodelling stores, is struggling with margins due to competition and the removal of Government stimulus payments.
Comparable consumer electronic sales across the Woolworths group for the full year declined 3.2 per cent.
One bright note was a 4.2 per cent improvement in home office gear at Big W.
Dick Smith, who finds themselves competing with Big W TV home entertainment promotions, is also struggling to compete with JB Hi Fi who during the past 12 months has expanded their home office and IT section.
Woolworth said that the tightening of Government handouts had “particularly impacted consumer electronics with increasing price competition resulting in lower margins in Australia. The new format stores in Australia, which have now reached 42 per cent of the total store network, are outperforming older store formats.
They said that consumer electronics sales in New Zealand continued to be challenged, with comparable store sales declining 12.1 per cent as the weak economic environment impacted discretionary retailers.
Fourth quarter sales for Australia decreased 1.5 per cent on the previous year. 
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