{"id":90596,"date":"1999-12-31T00:22:00","date_gmt":"1999-12-30T13:22:00","guid":{"rendered":"http:\/\/smartoffice.com.au\/panasonic-puts-dick-smith-on-credit-hold-call-for-asic-to-investigate\/"},"modified":"1999-12-31T00:22:00","modified_gmt":"1999-12-30T13:22:00","slug":"panasonic-puts-dick-smith-on-credit-hold-call-for-asic-to-investigate","status":"publish","type":"post","link":"https:\/\/staging.strixdevelopment.net\/smartoffice\/1999\/12\/31\/panasonic-puts-dick-smith-on-credit-hold-call-for-asic-to-investigate\/","title":{"rendered":"Panasonic Puts Dick Smith On Credit Hold Call For ASIC To Investigate"},"content":{"rendered":"<p>A survey by ChannelNews reveals that several leading distributors as well as consumer electronics vendors of goods to Dick Smith have not been paid for weeks.<\/p>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><span style=\"font-family: sans-serif; font-size: 13.3333px;\">Insiders are telling us that Dick Smith warehouses are full of &#8220;junk&#8221; house brand stock that the mass retailer is struggling to clear, Panasonic has confirmed that the Company has been put on credit hold and all future sales are on a cash only basis.&nbsp;<\/span><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">We have also been told that Dick Smith has a $250M lease expose and that landlords are now concerned that the Company is set to start closing stores or that they could fail altogether.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">A Deutsche Bank analyst wrote in a report yesterday &nbsp;that &#8216;The sheer size of the inventory impairment suggests the problem is much worse than we feared. With this being the second downgrade in a month and with the credit metrics tightening, DSH is likely to experience significant downward&nbsp;<\/span><\/font><span style=\"font-size: 13.3333px;\">pressure in the short-term. Of more interest to us is the potential impact on the broader consumer electronics sector.&nbsp;<\/span><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><span style=\"font-size: 13.3333px;\">We are reminded of the events of 2011-12 when the failure of WOW Sight &amp; Sound and the closure of 70 Dick Smith stores by Woolworths drove significant industry margin pressure.<\/span><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/div>\n<div>\n<div><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Fund managers say the company, which has net debt of $40 million, is struggling to pay suppliers and could become insolvent if sales fail to rebound over Christmas.<\/span><\/font><\/div>\n<div><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">&#8220;If I were a supplier I&#8217;d be getting worried,&#8221; said Forager Funds Management co-founder Stephen Johnson. &#8220;It&#8217;s priced like a distressed stock.&#8221;<\/span><\/font><\/div>\n<\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">ChannelNews has asked Dick Smith management about their trading issues on several occasions. &nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Neil Merola, the former Myer executive and now Marketing Director at Dick Smith, when asked about the high level of inventory in Dick Smith warehouses several weeks ago, told ChannelNews that the Company whose shares slumped to $0.28 cents yesterday after starting the year at $2.29 that the Company had seen the pending fall in the dollar and had &#8220;deliberately&#8221; gone out and acquired stock from overseas Companies.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">When we put it to him that sales and profits were down and that there was friction in management ranks concerning the high level of inventory he said &#8220;Who is feeding you this bullshit, it&#8217;s all rubbish&#8221;.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">He also denied that there was friction in the buying team over the high level of house brand stock being shipped into stores from the Companies Hong Kong buying group which is run by a relative of Dick Smith CEO Nick Aboud. &nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Yesterday calls to trade insurance Companies were running hot as distributors who have millions of dollars&#8217; worth of exposure to the embattled retailer made inquiries.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Heavily exposed at Dick Smith are brands such as ASUS, Toshiba and HP, Lenovo chose not to do business with Dick Smith in favour of relationships with Officeworks, Harvey Norman and JB Hi Fi.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Acer started cutting back their exposure to Dick Smith several months ago due to marketing demands that Dick Smith were making on vendors.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">A NSW based distributor of accessories and consumer electronic goods said &#8220;We are exposed. We have not been paid for eight weeks despite several calls to the Company&#8221;.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Another NSW based vendor of PC accessories said that after several weeks of calling Dick Smith they finally got a &#8220;partial payment&#8221;.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">During the past two month ChannelNews has exclusively revealed that several senior merchandising directors, a general manager and three buyers have quit the Company. We were also the first media Company to raise questions about inventory levels and falling sales.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Now there are calls for Dick Smith CEO Nick Aboud to quite, as questions are raised about the actual performance of Dick Smith stores during the period that Anchorage Capital were spruiking Company for their share listing.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">When Woolworths sold consumer electronics group Dick Smith in 2012 to Anchorage Capital for $94 million, Woolworths had previously invested millions in marketing, their store network. They introduced a new look, a new branding but despite this the consumer electronics chain failed to deliver increased sales, or profits.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">At the time Woolworths said that their Dick Smith business had been on a downward trend for five years, largely due to structural changes as consumers shifted to lower-margin products. &nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Then miraculously in a space of only a few months and under the management of Nick Aboud and Marketing Director Neil Merola the stores were suddenly performing. A deal was struck with David Jones, which has since been terminated, new Move stores were announced and stock was suddenly flowing through the Dick Smith store network. &nbsp;&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">At the time Woolworths was accused of selling it for a &#8220;peppercorn&#8221; after its new owners packaged it up 15 months later and listed it on the ASX with a value of $520 million.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">As soon as the money from the float has been pocketed by the likes of Aboud, Merola and Phil Cave the Chairman of Anchorage Capital things started to slide sideways.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Stores traffic was suddenly down while several stores across Australia were being quietly shut down. Then earlier this year as the problems at Dick Smith started to become visible, senior management started to quite.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Insiders have told ChannelNews that actual store sales were artificially inflated.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">&nbsp; Now Dick Smith stock is being labelled a wipe-out as shareholders slashed its shares 57 per cent, pushing its market value to less than $70 million.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">At 4.00pm last night shares in Dick Smith were at $0.28 after the Company finally came clean about the inventory levels that we had questioned management about several weeks ago.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">The share crash was based on the company&#8217;s decision to make a $60 million non-cash impairment before it had completed an inventory review, which was interpreted as a portent of worse to come.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">In a statement to the ASX &#8211; weeks after issuing a profit warning &#8211; the company said its October performance was disappointing, November was trading below expectations and stock holdings remain above management&#8217;s preferred levels.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">To this end it effectively scrapped its profit guidance and said a further impairment may be required, depending on the Christmas trading.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">What ChannelNews is suggesting is that the Australian Companies and Securities Commission step in to investigate whether information presented to the market prior to the float was accurate.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">One of the fundamental roles of a retailer is managing inventory.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">That Dick Smith has got its inventory so wrong raises questions as to why it was &#8220;so right&#8221; prior to the float and &#8220;so wrong&#8221; after the float when several people pocketed millions of dollars based on the perceived performance of the Company. &nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Fairfax Media wrote &#8216;In sharp contrast, the bloodbath at Dick Smith raises the question: would you let your mother buy from private equity? On the evidence of Dick Smith.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Anchorage Capital partners bought Dick Smith in 2012, beavered away for 15 months, tarting it up, to sell at a massive premium in December 2013 at $2.20 a share.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Private equity made a killing and investors who bought in the float have now seen hundreds of &nbsp;millions wiped off the value of the retailer.&nbsp;<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">The latest write-downs and an inability to confirm profit guidance paints a worrying picture for the company.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">&nbsp;It comes a month after announcing a big-bang discounting and marketing war to help improve sales during the Christmas period.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\"><br \/><\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">&#8220;We&#8217;re going to drive top-line sales and cash conversion through this period and get momentum back in the business,&#8221;Dick Smith boss Nick Abboud told the market in October, just after cutting full-year profit guidance.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><font face=\"sans-serif\"><span style=\"font-size: 13.3333px;\">Now Abboud can&#8217;t confirm anything, leaving shareholders wondering what to do. It also raises questions about what is really going inside the company, and what has gone so horribly wrong.<\/span><\/font><\/div>\n<div style=\"font-family: sans-serif; font-size: 10pt;\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A survey by ChannelNews reveals that several leading distributors as well as consumer electronics vendors of goods to Dick Smith have not been paid for weeks.<\/p>\n","protected":false},"author":42,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[28,179],"tags":[],"class_list":["post-90596","post","type-post","status-publish","format-gallery","hentry","category-archive","category-retail","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Panasonic Puts Dick Smith On Credit Hold Call For ASIC To Investigate - 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\/panasonic-puts-dick-smith-on-credit-hold-call-for-asic-to-investigate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Panasonic Puts Dick Smith On Credit Hold Call For ASIC To Investigate - 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