Receivers to close Dick Smith stores after failing to find a buyer

Thursday 25th February 2016

All of the Dick Smith stores in Australia and New Zealand are to close within the next eight weeks after the receivers said they had received no acceptable offers for the business.

The electronics store went into receivership on Jan 5. It brought in external consultants after disappointing trading in October and November and launched what it described as "significant marketing activity" to try to boost sales in the run up to Christmas and compete with rivals JB Hi-Fi and Harvey Norman.

The only stores unaffected by the closure are those in airports. It had been thought the NZ stores would find a buyer because the most recent results had shown it to be profitable, reporting earnings of A$903,000 in the year ended June 30, 2015.

"While we received a significant number of expressions of interest from local and overseas parties, unfortunately the sales process has not resulted in any acceptable offers for the group as a whole or for Australia or New Zealand as standalone businesses," said receiver James Stewart of Ferrier Hodgson. "The offers were either significantly below liquidation values or highly conditional or both".

There are currently 301 Dick Smith stores in Australia with 2,460 staff and 62 stores in New Zealand employing about 430 people. Stewart described it as a disappointing outcome for the employees "We would particularly like to thank the Dick Smith employees for their support and patience during the receivership process".

New Zealand employees made redundant will be ranked as preferential claims and are expected to be paid in full up to the statutory limit of $22,160.

Secured creditors are owed about A$140 million and unsecured creditors about A$250 million.

Dick Smith was valued at A$520 million when it was listed on the ASX in 2013 for $2.20 a share by owners Anchorage Capital Partners. They had bought Dick Smith from Woolworths in 2012 in a deal reportedly worth A$115 million. By the time shares were suspended on the ASX, they had fallen 84% to 35.5 Australian cents.

BusinessDesk.co.nz

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