Dick Smith listed on the Australian stock market in 2013. This year it has reported solid performance in Australia, with Australian earnings before interest, tax, depreciation and amortisation (EBITDA) up 21.9 percent. With New Zealand’s results factored in, Dick Smith’s total EBITDA shows a more modest increase of 7.3 percent. Total EBITDA is A$79.8 million.
Nick Abboud, Dick Smith managing director and CEO, says the group is pleased to have delivered a solid performance in the company’s second year on the stock market. He says growth was impacted by an intentional reduction in unsupported promotions, patchy trading conditions and one less trading day in the important June sales period.
Abboud says Australian’s gross margin is consistent at 24.9 percent of sales. New Zealand’s gross margin is 23.5 percent of sales, reflecting a more competitive market and increased promotional activity, particularly in the first half of this year.
“The company employed a disciplined approach to promotional activity, despite turbulent macroeconomic headwinds, including patchy consumer sentiment and challenging trading conditions, particularly in New Zealand.”
Dick Smith’s results briefing indicates the New Zealand arm of the group is responsible for 90 percent of the decline in gross margin. Dick Smith New Zealand reported a 71 percent drop in annual net profit, falling from A$3.2 million in 2014 to A$903,000.
Abboud told the National Business Review that Dick Smith was fighting for its slice of market share in New Zealand, but Kiwi consumer sentiment was more pessimistic than that of Australian consumers.
In the Woolworths camp, Countdown’s operating profit grew by 5.2 percent over the last financial year to hit $326 million. Its sales across New Zealand supermarkets hit $5.9 billion, representing growth of 2.5 percent.
Woolworths struggled at home, with the group as a whole experiencing a drop in net profit of 12.5 percent. Net profit is now down to A$2.14 billion.