Rick Hart Group will turn its focus to regional expansion in the next few years to further capitalise on Western Australia’s booming economy, which contributed to the group’s record first-half gross profit increase of nearly 30 per cent.
Rick Hart Group will turn its focus to regional expansion in the next few years to further capitalise on Western Australia’s booming economy, which contributed to the group’s record first-half gross profit increase of nearly 30 per cent.
Rick Hart Group managing director Rick Hart said the retailer had an established presence in the metropolitan area and would look to the regions for further expansion opportunities.
Mr Hart added that, while there were no immediate plans for Rick Hart to open on the eastern seaboard, it was a possibility once its parent company, Australian Stock Exchange-listed Clive Peeters, had bedded down recent acquisitions in New South Wales.
There are currently nine Rick Hart stores across Perth. Last week, Clive Peeters bought the Bunbury Betta Store, which will re-open as a Rick Hart store later this month. It takes the number of regional Rick Hart stores to five.
“It gives us a footprint in that region and we are looking for other regional stores,” Mr Hart told WA Business News.
Clive Peeters revealed this week that the Rick Hart Group was the driving force behind its 51.7 per cent jump in first half net profit of $8.9 million.
Rick Hart’s first-half gross profit climbed 29.4 per cent on the previous corresponding period to about $18 million, helping Clive Peeters offset a decline in NSW and flat growth in Victoria.
Sales in WA surged 19 per cent compared with a 1.1 per cent fall in Victoria and a steady 2.8 per cent gain in Queensland.
Clive Peeters was forced to open a new, larger temporary warehouse in Welshpool in August to accommodate what it described as “rapid growth” of its WA operations. It said it expected a permanent, purpose-built warehouse to be constructed in WA in the next 18 months.
Clive Peeters blamed interest rate rises, high fuel costs and flat housing markets for softer sales on the east coast, however, it said WA’s booming economy was underpinning a strong trading environment for the retail chain founded by Mr Hart more than 30 years ago.
Mr Hart said he expected the state’s booming economy to continue to drive growth for the business.
He said Perth’s slowing housing market was unlikely to put the brakes on sales growth.
“When the property market comes off the renovating kicks in,” Mr Hart said. “People decide they won’t buy a house but that they will renovate the kitchen instead.”
But, like his parent company, Mr Hart said competition remained fierce and margins were under pressure.
Clive Peeters bought Rick Hart in 2005 in a $3.5 million cash and scrip deal ahead of its stock market float.
Mr Hart was issued with just over two million shares at $1, the same as Clive Peeters’s float price. Clive Peeters shares have since soared to a record $2.90 and were trading at $2.79 at the time of print, valuing Mr Hart’s holding at more than $6 million.
Clive Peeters said it was expecting refurbishments for Rick Hart stores in Belmont and Victoria Park would be completed by June 30, and it had earmarked the retailer’s Osborne Park site for redevelopment in 2007-08.
Mr Hart said the biggest sales trend in the past year had been the surge in television sales.
“Plasmas and LCDs have outstripped everyone’s estimates. It’s not about one plasma anymore, it’s three or four. We had one guy come in and buy six,” he said.
Mr Hart said he had no immediate intentions of leaving the retailer.
