* FY14 net profit A$42.1 mln Vs A$40 mln forecast
* Electronics retailer's shares rise as much as 11 pct
* Bright spot in sector squeezed by sluggish economy
(Adds earnings details, outlook, broker comment)
By Byron Kaye
SYDNEY, Aug 19 Dick Smith Holdings Ltd,
the operator of Australia's biggest chain of electronics stores,
on Tuesday said it beat profit forecasts as a clampdown on costs
helped it sidestep the soft consumer demand that's plaguing the
Net profit came in at A$42.1 million ($39.3 million) for the
fiscal year to June 30, 5.3 percent ahead of a forecast the
fast-growing retailer gave when it went public in December 2013.
Dick Smith shares rose as much as 11 percent. Investors
homed in on an apparent success story in a retail sector that
has been weighed down by consumers tightening their belts amid
concerns about Australia's economy and government budget cuts.
At A$1.23 billion, revenue was on a par with forecasts in
the Dick Smith initial public offering prospectus, but the
company shaved 1 percent off expected operating costs. Results
were based on seven months of trading extrapolated over a full
year because of the change of in the company's status.
The lower costs came even as the company ramped up a
quick-fire store opening programme while also trying to boost
online sales. Dick Smith opened 54 new stores in Australia and
New Zealand in the fiscal year ended June 30, bringing its total
For the current financial year, the pace of store openings
will slow, with plans to open another 20 outlets. Sales for the
first seven weeks of the 2015 financial year have had "low
double-digit" percentage growth, leaving Dick Smith "well placed
to deliver further strong profit growth in FY15", the company
Analysts said the opening share price surge was as much
about overall gloom on prospects for retailers in a time of weak
consumer spending as about Dick Smith's financial performance.
Companies from consumer electronics retailer JB Hi-Fi Ltd
to department store operation Myer Holdings Ltd
have this year posted earnings that failed to sparkle.
"Retail is really patchy," said James Rosenberg, a private
client adviser at Macquarie Bank. "Expectations are fairly
modest so any meeting of expectations have been warmly received
by the market."
At 0423 GMT Dick Smith shares, which have seldom traded over
their A$2.20 issue price since listing, were up 8.8 percent at
A$2.17, having traded as high as A$2.22 during the day. The
benchmark index was 0.5 percent higher.
The early success of Dick Smith as a listed company comes
after Australian private equity firm Anchorage Capital Partners
sold down its 98 percent holding in the share listing process
little more than a year after buying the business from
Anchorage now owns 20 percent of the company, and said in a
statement it plans to keep its stake based on the earnings and
"our positive view of the company's future prospects".
Since being bought by Anchorage, Dick Smith has been opening
stores, pushing its private label products, and ramping up its
ability to sell online, including enabling stores to fulfill
orders made over the internet.
Online sales grew 55 percent and are now more than 4 percent
of total sales. The company grew sales of computer hardware and
what it calls "mobility" products - notebooks, tablets and
cameras - by 50 percent.
(1 US dollar = 1.0707 Australian dollar)
(Reporting by Byron Kaye; Editing by Paul Tait and Kenneth