Dick Smith shares have taken a nose dive despite the electronics retailer flagging a 10 per cent rise in full year sales.
The stock sank 15 cents, or 6.7 per cent, to $2.10 on Tuesday after the company unveiled a disappointing first half earnings result.
OptionsXpress market analyst Ben Le Brun says stunted sales growth in the company's New Zealand arm is weighing on investor's minds, with concerns of a flow on effect into Australia.
"There's fear of a bit of a contagion effect - it could potentially spread," he said.
Dick Smith's NZ division suffered a 53 per cent slide in first half earnings, as sales declined nine per cent amid tough competition from rival retailers and softer consumer sentiment.
Mr Le Brun said in December 2013 the NZ electronics market experienced a spike in sales following the country's switch over from analogue to digital TV.
"Those sorts of repeats are not something you can bank on next time around," he said.
Total sales in Australia rose 12.2 per cent during the half, aided by new store openings, with earnings up 16 per cent.
Comparable sales, which strip out the effect of store openings and closures, rose four per cent.
Despite tough trading conditions, the company posted a flat net profit of $25 million.
Revenue rose nine per cent to $693.8 million, aided by 11 new store openings and strong sales growth.
Managing director Nick Abboud said the retailer anticipated full year sales growth of about 10 per cent, with January sales up more than 17 per cent and February sales to date showing double-digit growth.
Dick Smith has nine more stores to open in the second half, including at Sydney Airport.
Mr Abboud expects the airport sales to rake in up to $50 million from sales to travellers in its first year.
The retailer, which listed on the ASX in December 2013, expects to open 20 new stores in the 2016 financial year, and is on track to reach its target of 450 by 2017.
Meanwhile, the group's online operations continue to perform, now representing more than seven per cent of retail sales.
"We anticipate achieving our objective of more than 10 per cent of retail sales online well before FY2017," Mr Abboud said.
DICK SMITH'S PROFITS DISAPPOINT INVESTORS
* Statutory net profit of $25.2m, up from a $4.9m loss and up 0.8pct from pro-forma result of $25m
* Sales of $693.8m, up 8.9 pct from $637m
* Fully franked interim dividend of seven cents a share
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