Australians appear to be skimping on the jackets but spending on gadgets.
Electronics retailer Dick Smith says its sales have grown in recent months, in stark contrast to several other major retailers who have been hit by falling consumer confidence linked to May’s federal budget.
The company’s sales grew by four per cent in the final three months of the financial year, excluding the impact of new stores.
Sales for the full year are expected to total $1.228 billion, slightly ahead of the $1.226 billion it forecast before listing on the share market in December.
“This was achieved despite encountering challenging trading conditions, including further deterioration in Australian consumer sentiment,” the company statement said.
Dick Smith joins rival JB Hi-Fi in proving resilient to weaker consumer sentiment, with JB recently forecasting a 10 per cent rise in its annual profit.
Analysts say the two were performing better than other retailers as they are not exposed to seasonal factors, such as an unusually warm autumn that hurt the sale of winter wear like jackets and socks.
Outdoor clothing chain Kathmandu, Bonds clothing maker Pacific Brands, discount retailer The Reject Shop and women’s apparel chain Noni B have all recently issued profit downgrades due to weaker than expected sales in May and June.
The conflicting performance of retailers suggests shoppers were reining in spending on clothes, but not on phones, televisions and other gadgets, CMC Markets chief market strategist Michael McCarthy said.
Changing consumer habits may also be at play.
“There is some evidence consumers are more comfortable buying clothing online rather than other goods such as electronics,” he said.
“People prefer to buy electronics in Australia because of the potential differences in services, refunds and power.”
Dick Smith’s move late last year to take control of electronics sections in David Jones department stores also appeared to have boosted its performance.
But Mr McCartney said it was still a new initiative, and he doubts it was the sole reason for Dick Smith’s growing sales.
Dick Smith shares gained three cents to $1.96.