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Less than 18 months after its $350 million float, consumer electronics retailer Dick Smith has embarked on another round of cost cutting, unveiling plans to trim 80 jobs in head office, supply chain and IT.
Dick Smith chief executive Nick Abboud said the restructure would save $8 million to $12 million a year and was in line with plans to reduce the company’s cash cost of doing business to between 17.5 per cent and 18 per cent of sales by 2017.
Mr Abboud reiterated Dick Smith’s guidance for 10 per cent sales growth, 7 to 9 per cent underlying earnings growth and 3 to 5 per cent net profit growth this year. However, he said the restructure would trigger one-off cash costs between $6.9 million and $7.9 million, or $4.8 million to $5.5 million after tax.
The job cuts followed a weaker than expected December-half result. Dick Smith’s net profit rose just 0.8 per cent to $25.2 million even though same-store sales rose 2 per cent and total sales rose 8.9 per cent to $693.8 million.
Gross margins fell 51 basis points to 24.7 per cent as the retailer cut prices amid widespread industry discounting.
Mr Abboud said the restructuring would not only cut costs but make it easier for suppliers to do business with Dick Smith and improve efficiencies through the supply chain.
The retailer has signed a long-term logistics contract with Australian and international providers, creating an end-to-end approach to supply chain management.
“Our commitment and ability to serve our customers with the product they want, when they want it, from our 388 physical locations and seven online platforms is unabated and remains at the core of everything we do,” Mr Abboud
