Jaycar’s Gary Johnston defies the rush to online

Jaycar’s Gary Johnstone is defying the tough times in retail and making canny moves in property.

Jaycar owner Gary Johnston has built an impressive business. Picture: Renee Nowytarger

Electronic retailing, property and a penchant for submarines make up the bulk of Gary Johnston’s investments and interests.

Johnston is the founder of the Jaycar chain of electrical goods stores, which are still providing him with good results and a big payday despite the widely-held view that physical retail stores are struggling in the face of competition from the big global online companies.

Jaycar delivered Johnston a $30m dividend in the 2019 financial year, according to a financial report for the group’s parent company lodged recently with the Australian Securities and Investments Commission.

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The consolidated financial statement for Gary’s Reward Pty Ltd for the year ending June 30, 2019, shows the $30m dividend being paid on June 28.

According to the financial report, the company achieved a small increase in sales revenue for the year, rising to almost $237m from $232m in the previous 12 months, and recorded a pre-tax profit of just under $35m .

Gary Johnston

• Age: 69
• Lives: Sydney
• Estimated wealth: $587m
• Source: electronics retailer Jaycar
• Secrets of success: building a debt-free retail success after leaving Dick Smith

However, the profit result was below the $42.9m figure recorded in 2018, with rises in the cost of sales and marketing expenses cutting into the group’s bottom line, though occupancy expenses did fall. Net profit was $25.5m, compared with $30.5m in the previous year.

Jaycar is the basis of Johnston’s wealth, estimated at $587m this year on The List — Australia’s Richest 250, which he founded in 1981 after a stint working for Dick Smith Electronics, though he also has other retail interests in Australia and Asia.

He employs more than 1000 people across his businesses, and has more than 110 Jaycar outlets. According to the latest financial report, the business opened four new Jaycar stores in 2019 and closed one.

Debt-free business

Johnston’s balance sheet has net assets of $182m, including almost $40m in cash and cash equivalents. More impressively, Jaycar appears to be debt free, with the business achieving its growth organically and any expansion self-funded. Jaycar’s wholesale arm Electus, which has a product range branded Techbrands, had revenue of $114m last year, according to another financial report. Johnston has previously reportedly considered an ASX float for the group, but in recent years has also diversified with Road Tech Marine, a retailer of boat, caravan and four-wheel drive cars and accessories, which he established in 2013.

Road Tech Marine has 13 store across NSW, Victoria, the ACT and Queensland, and styles itself as more of a specialist in technical components rather than simply selling tents and fishing rods.

Corporate and property records indicate Johnston also has extensive commercial property holdings, much of which is the ownership of the land upon which his retail outlets sit.

According to information compiled by The Australian, Johnston owns at least 30 properties, mostly in NSW, that cost about $60m.. Many properties were acquired in the past decade and would have achieved solid increases in value in that time.

Earlier this year, Jaycar struck a $80m deal with Frasers Property Australia to develop a new automated warehouse and distribution centre at the Eastern Creek Business Park in Sydney’s west.

That deal came after Johnston decided to sell a site in Sydney’s Granville South that had been earmarked to be Jaycar’s future head office and distribution centre. Johnston bought the site for $55m in 2016, but sold the site to Dexus for $67.7m in August 2018.

Submarine passion

Then there is Johnston’s passion for submarines. He has been part of an outspoken group of business identities, having established the Submarines for Australia website, who have campaigned to change federal policies regarding the buying and building of submarines.

Australia has agreed to a $50bn future submarine project, under which France’s state-owned Naval Group will deliver 12 submarines.

Details have emerged that the contract contained provisions for various break fees to be paid should the entire contract not be delivered. Johnston told Sky News earlier this year that a purported $330m break fee would be a “bargain” and that a $6bn quote for the design of the submarines alone was too high.

Johnston said Australia would be far better off buying “off the shelf” existing French nuclear submarines.