{"id":90705,"date":"1999-12-31T00:38:00","date_gmt":"1999-12-30T13:38:00","guid":{"rendered":"http:\/\/smartoffice.com.au\/cash-running-out-at-dick-smith\/"},"modified":"1999-12-31T00:38:00","modified_gmt":"1999-12-30T13:38:00","slug":"cash-running-out-at-dick-smith","status":"publish","type":"post","link":"https:\/\/staging.strixdevelopment.net\/smartoffice\/1999\/12\/31\/cash-running-out-at-dick-smith\/","title":{"rendered":"Cash Running Out At Dick Smith"},"content":{"rendered":"

Dick Smith store management claim that consumers have deserted the retail chain and that on some day’s takings are a tenth of what the stores were doing during the same period last year.<\/p>\n

“We have no stock and the perception is that the house brand stock that we are being asked to sell at inflated prices are not worth the money” said a Sydney store manager.<\/span><\/div>\n

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“We have had no real stock for months” they said. <\/span><\/font><\/div>\n

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ChannelNews has been told that the remaining management at Dick Smith, who are bleeding between $3M and $4M a week have been told that their jobs are secure until June the 30th with several managers locked into contracts until that date.<\/span><\/font><\/div>\n

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One senior staff member said “I think this has been done so the receivers can try to strech out the life of the stores. The more it stays up the more they make in fees” they said cynically.  <\/span><\/font><\/div>\n

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According to sources operating costs have blown out in recent weeks.<\/p>\n\n\n\n\n
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Click to enlarge<\/td>\n<\/tr>\n
Neil Merola the former Marketing Directory responsible for the Companies marketing and selling operations is believed to have gone to ground after being sacked.<\/span> <\/font><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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As at December 2015 Dick Smith had $30M in operating cash, by January this was down to $20M, rent on current Dick Smith stores is around $2.5 to $3M a week. <\/span><\/font><\/div>\n

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Operating costs on top of the rent bill are believed to be a minimum of between $5.5 to $6.5M. Operating on 20 points margin they are generating revenues between $7M to $8M a week.<\/span><\/font><\/div>\n

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There is also the possibility that receivers Ferrier Hodgson could start shutting down stores during the next few weeks as money starts to run out. <\/span><\/font><\/div>\n

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According to sources still working at the retailer these are stores that are were “unprofitable” prior to being placed into receivership as well as stores that prospective buyers have said that they have “no interest” in buying. <\/span><\/font><\/div>\n

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A prospective buyer told ChannelNews that they have concerns about the data provided via a “confidential data room” set up by Ferrier Hodgeson.<\/span><\/font><\/div>\n

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The CEO of one prospective Company said “There are a number of issues relating to the possible acquisition of Dick Smith. Firstly, the brand is broken beyond repair, I believe consumers will struggle doing business in a Dick Smith branded store. If anyone does buy into what the receivers are offering they are going to have to do radical surgery, rebrand and that means a big investment in marketing”.<\/span><\/font><\/div>\n

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“The other issue is that a lot of suppliers don’t want to see another competitor in the market up against Harvey Norman who are set to deliver excellent results similar to what JB Hi Fi delivered. Suppliers are looking to cut account management and merchandising costs and by concentrating on a select few retailers they believe that they can improve sales by working with a smaller group of retailers”.<\/span><\/font><\/div>\n

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“We have walked away because there is too much risk, banks are not prepared to back risky ventures especially a retailer trying to take on Harvey Norman and Dick Smith”.<\/span><\/font><\/div>\n

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The previous Dick Smith management team, headed up by former chief Nick Abboud had come to the conclusion in late November that they had to close stores if they were to cut costs.<\/span><\/font><\/div>\n
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A plan submitted to their banks was rejected as there was “real risk associated with leases” said an insider. <\/span><\/font><\/div>\n

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According to Fairfax Media stock levels have been in decline since after Christmas 2014, according to staff, who claim a decline in deliveries of high profile brands coincided with an increase in home brand stock and accessories, despite feedback that the Dick Smith and MOVE product was not popular with shoppers.<\/span><\/font><\/div>\n

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The demise of Dick Smith and the role of private equity group Anchorage Capital Partners in its transformation from a $94 million electronics business into a $520 million public company is now the subject of a Senate Inquiry, after independent South Australian senator Nick Xenophon gained bipartisan support for his inquiry into the collapse of Australian retailers last week.<\/span><\/font><\/div>\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

Dick Smith store management claim that consumers have deserted the retail chain and that on some day’s takings are a tenth of what the stores were doing during the same period last year.<\/p>\n","protected":false},"author":42,"featured_media":91413,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[28,179],"tags":[],"class_list":["post-90705","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-archive","category-retail","post_format-post-format-gallery"],"yoast_head":"\nCash Running Out At Dick Smith - 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\/cash-running-out-at-dick-smith\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cash Running Out At Dick Smith - 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