Dick Smith on track as NZ sales slump slows

Dick Smith Holdings has slowed its sales decline in New Zealand, largely in part to the shifting of certain business operations to Australia.

Released via the Australian Stock Exchange, the electronics retailer revealed its third quarter figures, highlighting a change of fortune for tyne Kiwi arm of the business.

“Particularly pleasing is the improvement in New Zealand’s LFL1 sales performance experienced during the quarter, which was impacted by the implementation of structural improvements,” said Nick Abboud, CEO and MD, Dick Smith.

“Our New Zealand stores experienced a LFL1 sales decline of 5.6% in Q3 FY14 (a 12.4 percentage point improvement on Q2 FY14), benefiting from a stronger New Zealand Dollar.

“Constant currency LFL1 sales of ‐18.8% showed an 8 percentage point improvement on the Q2 FY14 performance.”

According to the report, Dick Smith continued its “transformation of the New Zealand business”, which included integrating its New Zealand marketing and buying operations into Australia and outsourcing its Auckland DC operations to NZ Post.

The resultant 32 person reduction in staff is expected to simplify the ‘go to market’ structure and reduce costs.

“The early benefits to our New Zealand business from the February transformation are in line with our expectations,” Abboud added.

“We anticipate further improvements, particularly in sales, from stronger consumer offers and value perception available by leveraging our Australian buying power.

“With FY14 sales impacted by the focus on gross margin, we anticipate underlying sales growth returning to our New Zealand operations in FY15.”

In general…

On the whole, the company reported further improvement in its underlying sales performance in Q3 FY14, with group like‐for‐like1 (LFL) sales growing 1.0% and achieving total sales of AU$280.1m.

On a constant currency basis, LFL1 sales declined 1.8%, a 6.7 percentage point (pp) improvement from the Q2 FY14 performance.

“Dick Smith’s continued focus on its core growth strategies, including new stores, omni‐channel, private label and accessories, has enabled the business to achieve sales growth in the quarter,” Abboud added.

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