Shares in Dick Smith have bounced nearly nine per cent as the electronics retailer gears up for higher profits and sales in the year ahead.
Dick Smith made a net profit of $42.1 million in the year to June 29, easily beating the forecast provided to shareholders ahead of its market listing in December 2013.
Sales rose 0.1 per cent on its forecasts of $1.23 billion.
The retailer's like-for-like sales, which excludes the impact of new stores, dipped 1.9 per cent.
Investors were pleased, pushing Dick Smith shares up 17.5 cents to $2.17 on Tuesday.
While still short of its $2.20 listing price, CMC Markets chief market analyst Ric Spooner says Dick Smith has outperformed its closest rival JB Hi-Fi during a tough environment for retail.
"Dick Smith is emerging as the best breed in this space, not only was the result better than expected, but the market is encouraged by the improvement in like-for-like sales," he said.
"They also managed a significant improvement in their EBIT (earnings before interest and tax) margin during a difficult time in the market when there's considerable pressure."
The retailer's chief executive Nick Abboud forecast sales growth this financial year, largely thanks to the recent opening of 54 new stores plus another 20 in 2014/15.
"We are getting low double digit growth in the first seven weeks (of this financial year), where the market is nowhere near that," Mr Abboud said.
"That demonstrates that potentially there is more upside this year and beyond."
Meanwhile, private equity firm Anchorage Capital Partners says it has no immediate plans to sell its 20 per cent stake in the retailer, even though its holding came out of escrow following the earnings result on Tuesday.
This is a sign Anchorage believes its shares are worth more than their current market price.
Anchorage bought Dick Smith from Woolworths for $20 million in 2012, and raised $345 million by floating it on the market just over a year later.
Should it decide to divest of some or all of its stake, Anchorage said it would instruct its broker to regard recent trading activity and the prevailing share register.
Its stake in Dick Smith is currently worth about $103 million.
The electronics chain has 377 stores or outlets across Australia and New Zealand, which Mr Abboud said would eventually grow to 450.
DICK SMITH BEATS ITS FORECASTS
* Net profit of $42.1m, up 5.3 pct on $40m forecast
* Sales of $1.228b, up 0.1 pct on $1.226b forecast
* Fully franked final dividend of eight cents a share