DICK SMITH TO CLOSE DOORS AS OFFERS FALL SHORT
Written on the 25 February 2016 by Nick Nichols
AUSTRALIA'S iconic electronic retailer Dick Smith Holdings (ASX:DSH) is poised to close its doors in the next eight weeks after receivers failed to secure enough from potential buyers to keep the business afloat.
After a day punctuated by market volatility in the retail sector as profit reporting season hits its peak, receiver James Stewart, from FerrierHodgson, has revealed low-ball offers from interested parties were not enough to meet liquidation costs for Dick Smith.
Stewart had previously indicated more than 40 expressions of interest had been received for the company's assets, offering some hope to the group's 2900 staff that it could continue as a going concern.
"While we received a significant number of expressions of interest from local and overseas parties, unfortunately the sale process has not resulted in any acceptable offers for the group as a whole or for Australia or New Zealand as stand-alone businesses," Stewart says.
"The offers were either significantly below liquidation values or highly conditional or both."
Dick Smith has 301 stores in Australia and 62 stores in New Zealand after the appointment of voluntary administrators on January 4.
The planned closure will leave 2460 staff in Australia and 430 in New Zealand out of work, although Stewart expects all employees will be paid their full entitlements.
Australian employee entitlements rank as priority unsecured creditors ahead of the group's banks.
Stewart describes the planned closure as disappointing for staff, and he has paid tribute to their 'loyal service'.
"We would particularly like to thank the Dick Smith employees for their support and patience during the receivership process," he says.
The Dick Smith announcement comes on the heels of a horror day for the retail sector on the ASX.
Online retailer Temple & Webster suffered a 69 per cent fall in its shares after posting a $17.7 million loss in the December half year.
Action-sports online retailer SurfStitch also took a hammering despite net earnings rising to $5.7 million.
SurfStitch shares plummeted almost 43 per cent to a low of 99c, just below their $1 issue price in December 2014.
Overnight in the US, retail giant Lowe's, which partnered with Woolworths (ASX:WOW) in the ill-fated Masters business, reported a $US530 million ($746 million) writedown in the Australian joint venture.
All eyes will be on Woolworths tomorrow morning when the company is expected to reveal its half-year earnings.
Author: Nick Nichols