• Dick Smith may take female-friendly Move stores offshore

    Date: 2019.02.16 | Category: 苏州美甲美睫培训学校 | Tags:

    Dick Smith COE Nick Abboud at a new Move store in Sydney. Photo: Louise KennerleyDick Smith chief executive Nick Abboud is considering taking his female-friendly Move stores offshore as the retailer eyes growth opportunities beyond its traditional consumer electronics base in Australia.

    Launched by Mr Abboud in October last year, weeks before Dick Smith’s $520 million float, Move is now the fastest-growing and most productive part of the retailer’s business and is gaining global recognition after being nominated for three retail innovation awards.

    After receiving approaches from investors seeking to franchise the “fashtronics” concept, Mr Abboud is looking at options for taking Move overseas once store numbers have risen in Australia from seven to more than 30, including about 10 airport locations.

    “There’s nothing like this around the world,’ said Mr Abboud, who has more than 20 years retail experience, including 19 years at Myer. The 44-year-old came up with the Move concept after market research identified a gap in the $12 billion consumer electronics market.

    “The research that came back said that Dick Smith had pretty much a heartland type customer but the younger generation was not shopping at Dick Smith,” he said. “This was more about attracting a young affluent female customer.

    “I think Move could possibly go a lot further than 30 stores, but it may have to go international, and airports is an entry point to that,” he said.

    While Dick Smith and JB Hi-Fi are aimed at families with children and young- to middle-aged men, Move is blatantly targeting affluent 18- to 30-year-old women who see consumer electronics as fashion accessories.

    Move stores specialise in mobile technology including phones, laptops, portable wireless speakers, fitness monitors, headphones, clutch bags fitted with phone chargers and customised accessories featuring designs by fashion designers Dion Lee and We Are Handsome.

    Move stores are half the size of an average Dick Smith store and one-eight the size of JB Hi-Fi’s big boxes, but sales per square metre are higher than Dick Smith due to higher foot traffic and price points. Gross margins are expected to exceed Dick Smith’s (at present 25 per cent) as sales of private label Move accessories rise.

    Most importantly, Move gives Dick Smith a major point of difference with JB Hi-Fi as two of Australia’s largest consumer electronics retailers enter a new battle for market share.

    New JB Hi-Fi chief executive Richard Murray is intent on maintaining his 16 per cent share of the market, telling The Australian Financial Review last month he will not be undersold.

    Mr Abboud says Dick Smith is prepared to match competitors on price and now has supplier support and systems in place to ensure the chain can compete profitably.

    “We will not lose a sale as long as we are making money – we won’t allow staff to sell below cost,” he says.

    Dick Smith is using its $1.3 billion buying power to negotiate better deals with suppliers and generous rebates which give it more room to discount. Staff use deal calculators to judge how far they can reduce prices and stay above cost.

    “We’re not peddling on our own – that’s the difference between the new Dick Smith and the old Dick Smith,” said Mr Abboud, who took the helm a month after Anchorage Capital Partners paid Woolworths a $20 million down payment in 2012. He has since overseen a threefold rise in earnings.

    Nowhere is the battle between the two retailers more intense than at the recently refurbished Macquarie Shopping Centre in Sydney. Dick Smith has opened a 370 square metre store six doors down from JB Hi-Fi, as well as a Move store in the fashion precinct and a concession in the new David Jones department store.

    Mr Abboud says the three brands allow Dick Smith to take advantage of its buying power while appealing to three distinctly different groups of consumers.

    “It’s a fully integrated model – when we buy stock across all three brands the models and colours might be different but the deals we get are the same and support margins across all three brands,” he says.

    Mr Abboud is aiming to grow sales by between 5 and 10 per cent a year by using Dick Smith’s extensive store footprint (377 stores to JB Hi-Fi’s 182) to address all the touchpoints that influence a consumer’s purchase decision, including convenience, range and price, multichannel shopping with click and collect, and improved service, including post-paid mobile phones.

    At the same time, gross margins are expected to improve as the retailer expands its private label range from 11 per cent to 15 per cent of sales, while cost of doing business is forecast to fall from 19 per cent this year to about 17.5 per cent by 2017 – underpinning low double digit profit growth.

    Dick Smith is importing about $200 million in private label accessories under the Move brand and using the higher margin products to subsidise discounting on branded goods.

    “We’re selling it better, moving it better and we’re buying it a hell of a lot better as an organisation,” Mr Abboud says.

    “While Dick Smith did a very good job in private brand we’re taking it to another level. It will really help our margins and we can then go harder on selling computers and televisions.”

    Dick Smith’s underlying sales have been going backwards for most of the past five years. However, in the first 15 weeks of this year Dick Smith’s total sales grew 10 per cent and same-store sales rose 1.7 per cent – indicating that its sales growth strategy is achieving results –  while JB Hi-Fi’s same-store sales fell 2.1 per cent and total sales rose 0.5 per cent.

    Dick Smith shares have traded below their $2.20 issue price for most of the past 12 months, weighed down by concerns about the outlook for the consumer electronics category and the sustainability of the earnings rebound under Anchorage, which sold the rest of its stake in September.

    However, as the company approaches the first anniversary of the IPO, institutional investors and analysts are showing renewed interest.

    Cornerstone investor Perpetual has sold down, but FIL Investment Management has increased its stake from 7.9 per cent to 9.03 per cent in the past week.

    Ausbil Investment Management has reduced its stake in JB Hi-Fi in favour of Dick Smith. Ausbil director John Grace expects the company to generate low double-digit earnings growth as management executes its strategy, and sees further growth opportunities in the introduction of the three differentiated retail formats and omnichannel retailing.

    “In the short term we expect earnings growth will continue to beat forecasts,” Mr Grace said. “Together with a robust net cash balance sheet and a forecast fully-franked yield of greater than 6 per cent, there is solid valuation support.”

    Mr Abboud, who has about 15.3 million shares, making him one of Dick Smith’s largest shareholders, is sanguine about the share price and excited about the opportunities ahead.

    “Personally I don’t go home at night stressed about the whole experience, I actually get excited that I’m involved in that experience, whether it’s Move or David Jones or online or Dick Smith or duty free,” he said.

    “They’re things I know will put us way ahead of what everyone else is doing in the marketplace.”

    The self-confessed “gym nut” and new father is already thinking about growth options beyond 2017, when the company will have reached its 450-store target for the Dick Smith brand, online sales will have risen to 10 per cent and Move will have expanded into new markets.

    “We have no debt and a healthy cash position. We’ll start looking at acquisitions in similar spaces where we can increase our buying power and market share,” he said.

    “Forty per cent of the market is still fragmented, so there are plenty of opportunities.”

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