Electrical retailer, Dick Smith, has downgraded its full year profit guidance while announcing sales growth of 6.9 per cent for the first quarter of 2016.

The company anticipates net profit after tax for financial year 2016 could be $5 million to $8 million lower than the previous guidance of $45 million to $48 million.

“Given the October performance and expectations of challenging and variable market conditions, we are cautious about the outlook for the all-important Christmas trading period,” said Dick Smith MD and CEO, Nick Abboud.

During the period total sales increased 7.5 per cent to $1.32 billion with gross profit up 6.1 per cent.

Gross margin was adversely impacted by product and channel mix, with strong online sales offset by softer retail store sales.

Online sales doubled to more than eight per cent of retail sales, with financial year 2017 forecasts expecting to reach 10 per cent.

“Sales for the first quarter have improved on the prior year and last quarter, with New Zealand experiencing its best quarterly sales performance since acquisition,” said Abboud.

The company said October sales were disappointing with growth well below the level achieved in the first quarter of fiscal 2016 despite heightened promotional activity.

“We will continue to drive sales growth and protect market share, including launching the ‘Dick Smith Live Daily Deals’ campaign on television and radio this week to drive customers to our stores,” said Abboud.

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