Dick Smith beats earnings forecast

Dick Smith's turnaround strategy is paying dividends, revealing strong sales growth and news that it has beaten earnings forecasts for the first half of 2014.

The retailer today revealed it has beaten earnings predictions by 4 percent, with $41.7 million earnings before interest and tax for the first half of the 2014 financial year. Dick Smith is also reported net profit after tax of $25 million, meaning the company has already achieved 63 percent of its profit forecast for the full year.

While the company recorded a net loss of $4.9 million, revenue growth was solid. Revenue for the six months to 29 December 2013 was $637 million compared with $215 million for the four months to 30 December 2012.

It's a far cry from two years ago, when plans were being made to close up to 100 Dick Smith stores following declines in earnings under parent company Woolworths. The retailer was sold to investment firm Anchorage Capital in 2012.

Plans to turn around the company appear to be bearing fruit. Dick Smith's "private label" products, which are proving particularly important to the retailer's earnings, increasing to 11 percent of sales.

And while the company may have once been planning to shutdown many stores, bricks and mortar retail is proving a key plank once again in the retailer's strategy. The retailer opened 46 stores in the first half of the 2014 financial year, with plans to open 11 more this financial year. By 2015 the retailer hopes to have more than 400 stores.

Another strategy was to create "experience stores", a move which is achieving some success. "Store-in-store" sales were key at driving branded sales, while the retailer opened its first David Jones Electronics Powered by Dick Smith stores.

The company cited mobile phones as a key sales driver, with the company claiming to be Australia's largest independent and prepaid and outright phone retailer. Accessories also performed strongly.

Today's earnings announcement also highlighted strong sales in Xbox one, PS4, Apple tablets and iPhone, Samsung, Gopro and Fitbit products.

Online sales "grew strongly" to account for 3.3 percent of sales. A strategy to encourage customers to buy online and collect goods in stores is having some success, with "click and collect" buyers representing a third of online sales.

In contrast, online sales only represent 2.2 percent of sales at rival JB Hi-Fi.