363 Dick Smith stores to close as receivers fail to find a buyer

Nearly 3000 employees will lose their jobs across Australia and New Zealand.

363 Dick Smith stores across Australia and New Zealand will be closed after the receivers couldn’t find a suitable buyer for the electronics retailer.

301 stores will be closed in Australia and 62 stores in New Zealand, impacting about 2460 staff in Australia and 430 staff in New Zealand - employees were briefed on February 25.

This excludes stores at airport locations.

Receiver, James Stewart, of Ferrier Hodgson said that while it did receive a significant number of expressions of interest from local and overseas parties, unfortunately the sale process had not resulted in any acceptable offers for the Group as a whole or for Australia or New Zealand standalone businesses.

“The offers were either significantly below liquidation values or highly conditional or both,” Stewart said.

He said it was a disappointing outcome for the employees of Dick Smith who were loyal to the business.

All Australian employee entitlements will rank as priority unsecured claims ahead of the secured creditors and are expected to be paid in full.

Entitlements of New Zealand employees who are made redundant are preferential claims ranking ahead of the secured creditors, and are expected to be paid in full up to a maximum statutory limit of $NZ22,160 under New Zealand law.

Dick Smith’s secured and unsecured creditors are owed a total of $390 million. At the time receivers were appointed, the retailer had 393 stores across Australia and New Zealand under its four brands Dick Smith, Electronics by Dick Smith, Move, and Move by Dick Smith.

A Senate Inquiry is under way looking into Dick Smith's failure and what Anchorage Capital Partners did to take it from a $94 million business into a $520 million public company.

During its investigation of the business, the receivers discovered that about 3200 Dick Smith employees may have been underpaid their annual leave loading entitlements dating back to 2010 in Australia, estimating the underpayment may be about $2 million in total.

CEO, Nick Abboud, tendered his resignation in January and not long after that receivers shut down 27 Electronics Powered by Dick Smith concession stores, contained within David Jones department stores across Australia.

A syndicate of lenders made the decision to appoint receivers James Stuart, Ryan Eagle and Jim Sarantinos from Ferrier Hodgson on January 5.

This followed the appointment of Joseph Hayes, Jason Preston, William Harris and Matthew Caddy of McGrath Nicol as voluntary administrators on January 4.

Heading into the Christmas trading period, the retailer sounded a warning following a $60 million inventory write-down and conducted a 70 per cent off sale to help clear some of its excess stock.

The retailer was born in 1968 as a car radio installation business based in Sydney. In 1983, Woolworths, which owned 60 per cent of Dick Smith, moved to acquire the remaining 40 per cent stake before selling the business to Anchorage Capital in 2012 for $20 million.

The retailer publicly listed on the ASX in 2013, offering shares at $2.20 each. At the time of publication shares were trading at $0.35.


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