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.
Image credit: Jo Fothergill, Creative Commons
Honestly, DSE went in the completely wrong direction, I made a comment on a Perthnow article about it, but suffice it to say, DSE decided to go up against the bigwigs in home electronics and white-goods by selling TVs, stereos, games consoles, etc…
Harvey Norman, The Good Guys, Retravision (here in WA), just to name a few had already been doing good with sales of standard consumer stuff.
Now, had DSE continued down the path of electronics components, and gone up against JayCar and the likes, I imagine they wouldn’t be having this issue right now.
DSE has never been able to price match, for 10 digital cameras and 2 video cameras (about 3yrs ago), they were going to charge me an exorbitant price, got more quotes from Retravision and Harvey Norman and ended up going with HN because of the better than 50% price difference.
Plus, their slogan of ‘Talk to the Techsperts’, It may have been a good slogan at some stores, but at my local store, pretty much anyone who walked into the store likely knew more than the sales people, plus finding a sales person has always been a tricky thing too (though in saying that, I have found that with my local HN, you have to make yourself look suspicious before they’ll even come and serve you).
I totally agree, the move away from their original Electronics niche market was just plain stupid and suicidal – the JayCar owners must have broken out the champagne that day!
I’ve been into DS’s a few times in the last couple of years and just walked out disappointed, hopped in my car and drove to a JayCar store were I got what I needed without fuss.
PS. on a side note I was also really disappointed when DS under Woolies gobbled up and killed off Tandy Electronics – as kid getting the latest Tandy catalogue was always awesome (radio controlled cars, robot arms, computers, electronics kits etc) and our first IBM compatible PC in ’87 was the great little 1000 EX. :-(
This is a common failing of retailers these days. Seems the education system (becoming Americanised) is failing to teach about REAL WORLD retailing, and instead is teaching them to maximize profits, minimise costs, and don’t worry about the future viability of the enterprise. As long as they make the maximum amount of profit this quarter, nothing else matters.
I refused to shop there after Ican’t buy any “penny stock” any more. Want 1 battery or 1 small electronic component?. Sorry we only stock them in expensive blister packs, silk screened with the Dick Smith logo, and bundled together in minimum of 10 items, Seems you think I want to pay you for all this overhead, and ensure you make a minimum of $5-$10 on every sale, otherwise you aren’t interested in selling.
Unfortunately for Dick Smith, your maximum profit this quarter, has come at the expense of customer satisfaction. Once your customers have been in store a couple of times, not found the product they were looking for, and only found some “cheap generic Chinese brand” that you are trying to flog for a premium price, they “get it”, and you have lost (yet another) customer.
Well done for cutting staff, cutting costs, “trying” to charge premium prices for rubbish, that’s worked out well for you hasn’t it?
Not to mention the atrocious feedback customers are giving you about your online store.
“Where have all the flowers gone?
Young girls have picked them everyone.
Oh, when will they ever learn?” (Peer, Paul and Mary (c) Pete Seeger- Sanga Music Inc -BMI)
[Dick Smith] blamed uncritical financial media outlets and Australia’s growth-focused economic system for the company’s financial fall from grace, saying “most people” would know Anchorage Capital Partners’ sale of the company for $520 million after picking it up from Woolworths for $94 million was “impossible – you can’t have that type of gain in a short time”.
(http://www.watoday.com.au/business/retail/dick-smith-sees-survival-alongside-harvey-norman-jb-hifi-20160105-glzkdw.html)
When a major player in geek electronics is made over into a second-rate consumer electronics chain, barely making the cut against the American giant Tandy, the only road is down. Consider that enterprises like Harvey Norman and JB HiFi didn’t exist when Woolies decided to conquer the world, it becomes painfully obvious that most of the lower rungs in the ladder have gone AWOL. The market is too crowded in a very small fishpond.
“Where have all the soldiers gone?
Gone to graveyards, everyone.
Oh, when will they ever learn?” (op cit)
This is what happened to Dick Smith, it was an engineered failure by the looks:
https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/
Sooooo; a private equity group eh? Run by investment bankers?
Ripping off investors, legal or not it is theft, how surprising.
Who’s running Australia, NSW & Aust Post at the moment?
Interesting?? times ahead.
And I’m sure the common people for whom all Government and their agencies toil will be better off. /sarcasm
Nice find, some good reads. Thanks.
I clearly remember the two events that swore me off DSE:
1. Walked into the St Mary’s story to buy a variable resister and got told that they don’t do that any more and to go to JayCar.
2. I wanted to return a defective remote to the DSE store that used to be in the Myer Centre. The salesman tried to fake me out that they didn’t need to take it back because the packaging was not in the original state (i.e. – I had opened it)
I wish to pay my respects to Dick Smith Electronics:
Dick Smith Electronics, your electronic mosquito repellent recipe kit got me an A for my year 9 science project in 1989.
You will be sorely missed. Even your electronic door alarm. If you meet Alan Bond up there in your server farm in the sky please strap 2 electrodes to Alan’s bollocks and send him leaping 20 feet in the air. Dick Smith Electronics, you were my pal, confidante, nerd friend when I chose capacitors over girls, and most of all you were my light, soldering buddy and true guide.
RIP Dick Smith Electronics. There will never be another electronics store like you.
I agree with other commenters – in the off-the-shelf consumer electronics category, Dick Smith is an ‘also ran’ and will always be unless it competes on price. I knew that right away. I also couldn’t see many people buying Dick Smith-brand TVs. The shop’s range of products sucks even compared to ten years ago.
Go hard or go home. There’s no point and you’re doing the wrong thing by the hapless staff.
Also – lose the Dick Smith name! Any association with him and what made the business has ceased to exist.
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