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DSH - DSHE Holdings

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Re: DSH - Dick Smith Holdings

I generally know exactly what I want on all the stuff I buy so I rarely require staff assistance
I go for the cheapest price on stuff I want.

I only buy quality brands and I prepare to pay for them I just look for the retailer that sell me that item
at the cheapest price
 
Re: DSH - Dick Smith Holdings


Of course I don't base an investment decision based on how much I like/dislike a company. My assessment was on their online and support systems.

Your experience with retail staff is based on somebody with little technological knowledge as you mentioned. For most the technology savy, there are much better resources out there. Of course from an investment perspective, if most of the customers coming in are not technology savy and the staff manage to get them to buy stuff and leave happy, then that's a good thing.

DSH up again today and JBH down. Overall, I think JBH is a much better business and brand. I'll have to look into it closer to see whether it's worth a buy if the price keeps dropping.

I am sceptical of any numbers published by DSH this year after being tinkered with by private equity.
 
Re: DSH - Dick Smith Holdings

hiddencow said:
Of course I don't base an investment decision based on how much I like/dislike a company.
Click to expand...
This is what you said earlier and on what I based my comment:
Haven't looked at the financials but my last online shopping experience with DSE was terrible and put me off purchasing from them again (and probably investing in them as well).
Click to expand...

Your experience with retail staff is based on somebody with little technological knowledge as you mentioned.
Click to expand...
I simply know my limitations when looking for something new. Doesn't mean I'm a total dope.

For most the technology savy, there are much better resources out there.
Click to expand...
A qualifier would be that not everyone wants to buy on line, often because of the very experience you quoted before. Buying at retail level ensures the capacity to physically return a faulty product and stand there until something is done.
Further, what resources are available will depend on where one lives. Regional towns are going to have more limited options than capital cities.
 
Re: DSH - Dick Smith Holdings

skc said:
DSH doesn't sell Apple ware while JBH's falling LFL sales was specifically attributed to tablets... so that may be the reason. Or what JBH management wants us to believe.
Click to expand...

I always thought tablets where a joke. Steve Jobs made the legendary decision to put out the Iphone which was based on his teams development of a tablet. He had the epiphany "This would make an awesome phone" and took the market by storm.
Then almost as an afterthought they put out the tablets that many jumped on on the back of the Apple mania. It is now dying and is useless apart from some niche areas.
The PC\laptop will make a come back and the tablet should morph into a Nokia Lumia 1320 phablet with 6-inch 720p (or something like that) should take over as you really can use it to check stuff on the net without needing a magnifying glass and dwarf fingers, whilst using it as and smart phone. Can they promote it well enough to get people to realize it? They don't know how important that marriage is yet. Buy one and you will not regret it, even though the apps are not quite their yet, they will improve. It does all the jobs well enough. The bad is it doesn't sync with outlook only with cloud mail.

Back to dick. It's really hard to imagine how they can do well unless they are somehow the super cheap retailer, crazy sales, kogan with a shop front. That would be interesting. So far they are pulling off something quite special. Good luck to them for having a go. I gave them absolutely no chance on the old model.
 
Re: DSH - Dick Smith Holdings

notting said:
I always thought tablets where a joke.
Click to expand...

I have never owned one and my natural human instinct that provides resistance to change is well in-force when I think of replacing either my computer or phone with a tablet!

I do hope your predictions hold truth, sir!
 
Re: DSH - Dick Smith Holdings

I actually think tablet will be the future, it will get more powerful and lighter and more integrated into a PC like
but portable, light and powerful (Microsoft Surface 3)

I own iPad since it first release, I love it, it portable and simple and I can sit on the couch and read AFR or magazines or take with me traveling keep me occupied for hours on the airplane playing simple games.

the Microsoft Surface Pro 3 is looking good so I may grab one when it release next Month
didn't like the first 2 release... cant compete with iPad

I am a bit of a tech junkie, though I am not the early adopter of everything but anything that is good
and meet my need I am usually the early adopter of them

http://www.microsoft.com/surface/en-au/products/surface-pro-3

back to DHS I usually don't like this sort of business, too much competition not enough margin
the odd of picking winner is fairly hard.
 
Re: DSH - Dick Smith Holdings

Interesting to do a comparison of sales and number of stores to JBH: DSH generates $1278M sales from 377 stores (ie. $3.39M sales/store) and JBH generates $3484M sales from 182 stores (ie. $18.59M sales/store).

I wonder when there is a point of diminishing returns by having more and more stores, particularly if a longer-term aim is to generate greater online sales?

Too many stores may also expose you to more commercial property leasing risks eg. when the retail property market improves and market rents increase due to supply/demand balances.

I think similar may apply for companies like WOW/WES who in time may generate more sales of groceries through their online channels with home delivery/in-store pick-ups.

And perhaps there may be less of a need for lots of retail property and instead fewer but larger industrial property to act as distribution centres?
 
Re: DSH - Dick Smith Holdings

Looks like a breakout at 2.32 with a short term target of 2.710. Technical buying signal at au stoxline.
 
Re: DSH - Dick Smith Holdings


A bit off topic but I recently came across this article about "dark store" which is quite fascinating.

P.S. If there was ever a zombie apocalypse (Walking-Dead style), I am going to get my supplies from a dark store!

http://www.insideretail.com.au/blog/2014/08/11/woolworths-dark-store/
 
Re: DSH - Dick Smith Holdings


This was certainly the trend over the in the UK. Apart from zombie apocalypses being more likely over there, it also rains a lot so why bother going outside when the store comes to you?...

This one of the difficulties Tesco is facing vs competitors such as Lidl.
 
Re: DSH - Dick Smith Holdings

DSH is cutting a reasonably large amount of staff due to getting more into online selling which is a good thing because every time I walk past a store I see hardly anyone in them and then go to JB which is buzzing.
If you judged it purely on what the store traffic looks like you'd have at about where WOW had it!
 
Re: DSH - Dick Smith Holdings

Yet another crash for Dick Smith - not particularly promising.
 
Re: DSH - Dick Smith Holdings

New guidance is 37-40m NPAT. At the lower end that's a PE of just under 6.

At 30m NPAT it's still only a PE of 7.

Admittedly that guidance is (cautiously) dependent on a reasonable holiday / summer period.

The problem is, in the last few years their cash conversion (at a brief look) looks horrible, and it's well under the reported NPAT figures. They are saying that has been because of working capital constraints and that it'll start unwinding from the 2016 FY onwards. The cynical investor may think that there was quite a bit of profit "massaging" when this floated, and potentially still is some of it in the reports.

There's about $70m debt in the 2015 report, plus around $18m in lease liabilities.

That's not too bad at the moment, but if the earnings cycle really bites, retail businesses have lots of fixed costs and embedded operational leverage and things can turn south really quickly. You don't have to go back too far before the "Private equity turnaround" of Dick Smith to see how bad it can get.

Still, it's priced for a lot of doom. Anyone want to comment on the probabilities that they need to raise capital in the next few years, or can they find a floor for their earnings somewhere around $25-30m?

edit: I wonder how much of their current downgrade has to do with them stopping the Apple "promotional" offers (ie. heavy discounting) they were using to get foot traffic into the stores. I remember at the time of the 2015 results analysts were pretty bearish when they announced this.
 
Re: DSH - Dick Smith Holdings

I was speaking to someone in retail this morning about DSH. Their blunt assessment "there's no f**kin money in their categories". Apparently their buying doesn't suggest they're expecting a big holiday period. Private equity did a pretty good job of flogging this as a growth stock.

Retail is tough, and even tougher for resellers these days. Browngoods used to be a bonanza ten or so years ago, now margins are tight the foot traffic doesn't bring in the $$$ it used to, just a lot more tyre kickers. Whitegoods are going the same way now that JBH and a few others have started aggressively going after that market.
 
Re: DSH - Dick Smith Holdings


It's the greatest private equity swindle of our times... along with Myer.

The market knew they are in trouble since the report... or it'd have show some bounce at PE 7x.

DSH were doing a lot of these 20% off ebay deals which was probably a good indication of how bad things were.
 
Re: DSH - Dick Smith Holdings

Thanks gents. Interesting to see how this plays out, most likely I'll only be an on-looker. Still too much risk in the price for what is, as McLovin said, essentially a no-growth stock in a highly competitive retail industry. Too hard to come up with a decent estimate of earnings across the cycle for me.

It appears that they seem to have got their product mix very wrong leading up to the current earnings forecast, which ruined their margins. Looking at JBH and HVN, they seem to have had much more positive outlooks at their respective AGMs.

The big problem with retail is, no matter how recognised the brand, it still takes a good operator to manage the business, not any old dummy can do it.
 
Re: DSH - Dick Smith Holdings

notting said:
Who the hell would buy it?
I can't wait to see who the major steak holders would be.
Look out for what ever else their in and look to get short.
Click to expand...

Evan Lucas said the market was speculating on how Dick Smith could lose so much momentum in a month while Harvey Norman powers ahead.

"What exactly has happened in October to drop the expectation so drastically is not clear," he said.

notting said:
If you judged it purely on what the store traffic looks like you'd have at about where WOW had it!
Click to expand...

Yeah, heading back there, (what WOW sold it for) after what? - some kind of accounting trickery to do the float and follow up with 12 months of BS. Now leaking out the reality in bits. Stores a still dead compared with JB floor action it remains a farce.
 
Re: DSH - Dick Smith Holdings

Thanks all. Yep, agree with all the comments. As you say, not easy to run a retailer in this market particularly if you stuff up your product mix and poor management. I also wonder if there is any merit in the takeover rumours that floated recently particularly with the price depreciating by over 40% just in the last 2 weeks alone ..
 
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