Dick Smith set for strong debut
Shares in stockmarket debutant Dick Smith are expected to trade strongly on Wednesday as investors rush the chance to invest in a mid-cap retailer with a national footprint of stores, as chief executive Nick Abboud beats the drum over the electronic store's growth credentials.
"We are going to be a growth stock," Mr Abboud said on the eve of its first day of trading on the Australian Securities Exchange after a lightning quick corporate reincarnation and turnaround since it was bought by private equity for only $94 million last year from Woolworths.
With its shares issued in the IPO at $2.20 each, Dick Smith is primed for a market value of at least $520 million when trading kicks off, crystalising a massive payday for its private equity owners Anchorage, estimated to be around $250 million.
When asked if he would be sending a thank-you card to Woolworths, Mr Abboud chuckled and preferred to focus on Dick Smith's prospectus targets and its aggressive store roll-out program that will underline its growth trajectory over the next two years.
"We are opening a fair few stores in coming days," Mr Abboud said.
"Eight shops in basically four weeks. Its fairly significant and there wouldn't be many retailers opening eight shops in four weeks, and this is where the excitement is for us, and more so for fiscal 2015 because you get a full year [of new stores]."
He said come July, Dick Smith would have 46 extra stores than the company had under its banner in July 2013. Dick Smith has 359 stores across Australia and New Zealand, with pro-forma revenue of $1.28 billion in 2012-13. Earnings before interest, tax, depreciation and amortisation are forecast to reach $71.8 million in fiscal 2014.
Mr Abboud mirrored comments made by other retailers calling on the federal government to scrap the $1000 GST-free threshold on imported goods. But he strayed from the retail pack saying Dick Smith was actually less threatened by the ability for shoppers to buy goods online from overseas websites that did not charge a 10 per cent GST or duty.
"I think it [the GST-free threshold] should come down to obviously allow that level playing field but for electronics it really doesn't impact us too much because there are not many people buying a TV or a computer offshore."