{"id":89921,"date":"1999-12-31T00:29:00","date_gmt":"1999-12-30T13:29:00","guid":{"rendered":"http:\/\/smartoffice.com.au\/woolworths-release-dick-smith-from-upside-obligation-as-master-costs-blow-out\/"},"modified":"1999-12-31T00:29:00","modified_gmt":"1999-12-30T13:29:00","slug":"woolworths-release-dick-smith-from-upside-obligation-as-master-costs-blow-out","status":"publish","type":"post","link":"https:\/\/staging.strixdevelopment.net\/smartoffice\/1999\/12\/31\/woolworths-release-dick-smith-from-upside-obligation-as-master-costs-blow-out\/","title":{"rendered":"Woolworths Release Dick Smith From Upside Obligation As Master Costs Blow Out"},"content":{"rendered":"

Woolworths who last year sold their Dick Smith operation to concentrate on the roll out of the Master hardware chain has finally admitted that the costs of rolling out the chain has blown out to a pre-tax loss of $157M.<\/p>\n

They have also announced that they have released Anchorage Capital Partners from its obligation to deliver Woolworths any upside resulting from the future sale of electronics group Dick Smith.<\/span><\/div>\n

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Woolworths sold Dick Smith to Anchorage last year and had agreed to some upside in the future if the business was later sold.<\/font><\/div>\n

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Woolworths said this morning in return for the new deal it would receive payments of $74 million to be booked as income in 2012-13.<\/font><\/div>\n

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As a result of these additional proceeds the loss to Woolworths from the sale of Dick Smith of $65.7 million shown in its half year 2013 results will become a profit of $7.9 million in financial 2013.<\/font><\/div>\n

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<\/p>\n
Anchorage Capital Management said t5hat today signifies a new chapter in Dick Smith’s independent success as Anchorage Capital Partners and Mangement, led by Nick Abboud have completed a release from the financial obligations to its former partner; Woolworths. <\/div>\n
<\/div>\n
The buyout coincides with the Phase 1 completion of Dick Smith’s turnaround initiative which has increased operational efficiency, profit margins and growth, since the initial takeover from Woolworths in 2012. <\/div>\n
<\/div>\n
Nick Abboud, CEO of Dick Smith Australia and New Zealand says, “This is a very exciting day for Dick Smith – one that we have been working towards since Anchorage first came on board. The Dick Smith business is in a strong financial position with cash in the bank and no net debt. Based on Dick Smith’s performance over the last six months we are confident the business will continue to experience positive growth and performance as a major player in the Australian consumer electronics industry.”<\/div>\n
<\/div>\n
“Dick Smith is committed to helping consumers get the most out of their technology and that starts in store. In the coming months we will be announcing a number of exciting initiatives that will see major changes to customers’ retail experience and an expansion of Dick Smith’s footprint throughout Australia and New Zealand.”<\/div>\n

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Woolworths are also facing the potential of having to pay out between $700 and $800M to Lowes their US partner in October 2014 due to a “Put Option”.<\/font><\/div>\n

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Master who is selling white goods and small appliances has admitted that they overestimated the costs of launching the chain up against the Wesfarmers owned Bunnings and Mitre 10.<\/font><\/div>\n

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A statement to the Australian Securities Exchange said the higher losses were due to overly optimistic sales budgets, relatively higher wage costs for new store openings and lower margins due to the sales mix.<\/font><\/div>\n

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Insiders are tipping that a new CEO could jettison appliances which are not delivering the returns that were first forecast.<\/font><\/div>\n

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Recently several Analysts questioned the true cost of the Masters roll out and the losses it was accumulating for two-thirds owner Woolworths.<\/font><\/div>\n

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Woolworths has also announced revised earnings guidance, saying it now expected net profit after tax from continuing operations, excluding non-recurring items, to grow in the range of 5 per cent to 6 per cent.<\/font><\/div>\n

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Woolworths is still forecasting that Masters will break even during financial 2016, assuming more moderate growth in sales per store and improvements in gross margins.<\/font><\/div>\n

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Woolworths expected the losses for financial 2014 not to exceed this year’s levels.<\/font><\/div>\n

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In its hardware update this morning, Woolworths said there were currently 120 active sites on its books for Masters and at the end of 2012-13, 31 stores were open. But due to the timing of approvals and construction the number of store openings in the first quarter of 2013-14 would be lower than the recent run rate.<\/font><\/div>\n

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Woolworths also moved this morning to quash any suggestion its one-third partner in Masters, US hardware giant Lowes, was seeking to dump its stake in the Australian business and walk away from the partnership.<\/font><\/div>\n","protected":false},"excerpt":{"rendered":"

Woolworths who last year sold their Dick Smith operation to concentrate on the roll out of the Master hardware chain has finally admitted that the costs of rolling out the chain has blown out to a pre-tax loss of $157M.<\/p>\n","protected":false},"author":42,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[28,20,30],"tags":[],"class_list":["post-89921","post","type-post","status-publish","format-gallery","hentry","category-archive","category-sales-marketing","category-sales-and-marketing","post_format-gallery"],"yoast_head":"\nWoolworths Release Dick Smith From Upside Obligation As Master Costs Blow Out - Smart Office<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/staging.strixdevelopment.net\/smartoffice\/1999\/12\/31\/woolworths-release-dick-smith-from-upside-obligation-as-master-costs-blow-out\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Woolworths Release Dick Smith From Upside Obligation As Master Costs Blow Out - 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