Dstore to challenge E-store for IT e-tail

The chief executive officer of Dstore owner Hotshed Retail, Andrew Cooper said the company was in advanced negotiations with IT distributors "that an E-store might secure their stock from".

"The beauty of our business is, based on the figures that have come out from Red Sheriff, our traffic is four times E-store's, so we believe we have a pretty good customer base there to take advantage of," said Cooper.

Hotshed revealed the plan after announcing today that Dstore had returned its first profitable quarter since it was purchased from receivers Ferrier-Hodgson for AU$615,000 in September 2001.

Cooper said the company had returned a small profit of AU$35,000 on sales of AU$1.2 million for the December 2002 quarter.

The profit result represents a significant turn around for the company which once symbolised the excess and failure of the dot-com boom.

Dstore which once raised AU$36 million in investment backing from a share register that included Kerry Packer and high-profile dot-com capital fund, Tinshed, burned through around AU$30 million dollars without turning a profit before being liquidated along with its owner, retailer Harris Scarfe, in January 2001.

In making the turn-around Cooper said Hotshed had stripped unprofitable product lines from the e-tailers' inventory list, drastically cut its staff and uncoupled the online brand from its warehouse, choosing an third-party supplier model instead.

Cooper said it was a matter of selecting products that are most suitable for the online market. Books, CDs, DVDs, computer games and jewellery are Dstore's lead selling items according to Hotshed.

Cooper said the company is taking the next step of expanding its inventory list to include IT hardware and software, as it believes they sit among a group of product-lines that are likely to succeed in the online market.

"The margins are quite thin [in IT sales] but the consumers that do tend to buy online tend to be fairly technically literate," said Cooper.

Cooper said the company expected to return to break-even results for the March quarter.