Woolworths’ divestment of the Dick Smith chain of consumer electronics has incurred a net profit drop of 15 percent for its 2012 financial year.
The retail chain recorded net profit, including its discontinued Dick Smith operation, of $1.8 billion, down from the previous years’ $2.1 billion.
Notwithstanding a $383 million net cost for the restructure of Dick Smith, Woolworth's net profit rose 3.6 percent to $2.2 billion for the fiscal year.
Dick Smith sales increased 2.3 percent in Australia over the period, coming in at $1.6 billion. Woolworths has closed 74 Dick Smith stores to date, with a further 22 to shut down in FY2013. It currently has net assets worth $8.4 billion related to the Dick Smith chain.
Woolworths announced in January this year it would shut down the Dick Smith chain after a November 2011 review concluded the brand was not delivering a sufficient return on investment.
It announced it would close 100 of 386 underperforming Dick Smith stores, hoping to sell off the remaining outlets. Woolworths said several parties have expressed interest but no formal offers appear to have surfaced at this stage.
The resignation early this month of Dick Smith boss Debra Singh appeared to have been timed to coincide with the imminent sell off of the chain, according to an internal memo sighted by the Australian Financial Review.
The AFR cited several private equity firms, including Australian-based Anchorage Capital, as likely bidders. Woolworths is yet to comment on a potential acquisition.
Its shares were up $0.39 to $29.00 at midday today.
Copyright © CRN Australia. All rights reserved.
Issue: 334 | December 2014
Access CRN's extensive online resources including; email bulletins, community discussions and unique online news.
Processing registration... Please wait.
This process can take up to a minute to complete.
A confirmation email has been sent to your email address - SUPPLIED GOES EMAIL HERE. Please click on the link in the email to verify your email address. You need to verify your email before you can log on to the CRN website or start posting comments on articles.
If you do not receive your confirmation email within the next few minutes, it may be because the email has been captured by a junk mail filter. Please ensure you add the domain '@crn.com.au' to your white-listed senders.