news Dick Smith Holdings Ltd, the Australian electrical retail group, has entered receivership, according to a statement.
James Stewart, a partner at receiving company Ferrier Hodgson, said it was too early to clearly identify the primary causes of the company’s current financial position and the reasons for its decline other than saying the business had become “cash constrained in recent times”.
He added that it would be “business as usual” while his firm looks at the restructuring and realisation opportunities for the group.
Stewart stressed that employees will continue to be paid, and that it is expected that Australian employee entitlements will be covered under the Fair Entitlements Guarantee (FEG) scheme if the business cannot be sold as a going concern.
The New Zealand business is profitable, however, and is expected to represent an attractive proposition to potential buyers.
Stewart also said that due to the financial circumstances of the group, outstanding gift vouchers cannot be honoured and deposits cannot be refunded. However, affected customers will become unsecured creditors of the group.
“Dick Smith is one of the best known brands associated with consumer electronics in Australia and New Zealand.” Stewart said. “We are immediately calling for expressions of interest for a sale of the business as a going concern.”
DSH currently operates 393 stores across Australia and New Zealand under four brands, Dick Smith, Electronics powered by Dick Smith, Move, and Move by Dick Smith.
The group employs 3,300 employees and has annual sales of approximately $1.3 billion, according to figures from the receivers.
Dick Smith grew from humble beginnings as a car radio installation business in Sydney in 1968. In 2012, the firm was sold by Woolworths to Anchorage Capital Partners for a mere $20 million – despite reported annual sales of $1.6 billion the previous year.
The move aimed to help rejuvenate the business, which was already ailing, and provide some employment certainty for its 4,500 staff at the time. Anchorage took Dick Smith public in 2013.