A private equity firm is holding onto its stake in Dick Smith as the electronics retailer expects profit and sales to grow in the year ahead.
Dick Smith made a net profit of $42.1 million in the year to June 29, beating the forecast provided to shareholders ahead of its market listing in December by 5.3 per cent.
Total sales were up 0.1 per cent on its forecasts at $1.23 billion.
The company’s like-for-like sales, which excludes the impact of new stores, were down 1.9 per cent in 2013/14, but up 4.2 per cent in the second half of the year.
Chief executive Nick Abboud said like-for-like sales growth would continue in the current year, and total sales would benefit from the impact of 54 new stores opened in 2013/14, plus another 20 planned for 2014/15.
Total sales had continued to grow so far in the current financial year, he said.
“We are getting low double digit growth in the first seven weeks, where the market is nowhere near that,” Mr Abboud said.
“That demonstrates that potentially there is more upside this year and beyond.”
Anchorage Capital Partners says it has no immediate plans to sell its 20 per cent stake, indicating it believes its shares are worth more than their current market price.
Anchorage bought Dick Smith Electronics from Woolworths for $20 million in 2012, and raised $345 million by floating it on the market just over a year later.
“In light of the recent trading results and our positive view of the company’s future prospects, we currently have no intention of selling at the prevailing market price,” Anchorage said.
Should it decide to divest of some or all of its stake, Anchorage said it would instruct its broker to regard recent trading activity and the prevailing share register before selling.
Its stake in the company is currently worth about $103 million.
The electronics chain has 377 stores or outlets across Australia and New Zealand, which Mr Abboud said would eventually grow to 450.
Dick Smith shares were up 18 cents, or nine per cent, at $2.175 at 1200 AEST.
DICK SMITH BEATS ITS FORECASTS
* Net profit of $42.1m, up 5.3 pct on $40m forecast
* Sales of $1.228b, up 0.1 pct on $1.226b forecast
* Final dividend of eight cents a share