Dick Smith is facing the real possibility that several of their unprofitable stores will be closed down in the new year with several store managers claiming that foot traffic into their stores is extremely “slow”. We can also reveal that an Asian group is currently running a ruler over the struggling retail group.
Dick Smith Stores Struggle As Takeover Claims Emerge
A visit yesterday to several Dick Stores in Sydney revealed poor traffic and in some stores during the peak lunch time period there were no customers queuing to pay for goods.
At 1.00pm yesterday at the Dick Smith George Street store ChannelNews saw only one person pay for goods, the store was primarily empty despite it being one of Dick Smiths flagship appliance stores.
It was also the same at the Company’s other CBD store located right next to Myers and one of the CBD’s biggest food courts.
One store manager at a Dick Smith store said “It’s been like this for weeks, we are not getting the traffic into stores despite Dick Smith delivering good discounts. I think there is a perception that Dick Smith is all about online discounts with stores being given a miss. We are carrying a lot of house brand products that also puts people off despite the fact that we also have a lot of quality brands”.
He added “Some managers are concerned that they and their staff will be out of a job after Christmas as some stores are not profitable and the Company is not in a position to carry unprofitable stores”.
10 minutes after visiting the Dick Smith CBD stores we visited two JB Hi Fi stores. At JB Hi Fi in the strand consumers queued the whole length of the store to pay for their purchases which included gaming consoles, smartphones, new two in one notebooks and covers.
Internally Dick Smith management have moved to look at restructuring their Hong Kong sourcing office after buyers at the besieged Company complained about the amount of “house brand” stock being shipped into Australian stores without consulting buyers in Australia.
The General Manager of the Hong Kong Office for International Sourcing at Dick Smith Electronics is Tony Abdel-Ahad who last week flew back to Hong Kong after a visit to Australia.
Abdel-Ahad, joined Dick Smith from Abu Dhabi based Mezzo Middle East two years ago his experience is in UAE real estate and not consumer electronics.
This has prompted senior Dick Smith management to now review their sourcing operations.
Yesterday Dick Smith shares slumped to $0.75 after selling 12 months ago at $2.29.
ChannelNews has been told that an overseas investor is currently looking at moving on the group with a view to acquiring the Company. Sources have said that the share value of the Company has to fall further before a takeover move is triggered.
“They have the money and are cashed up. They believe that the Company will struggle to lift sales during the Xmas New Year period due to stock problems. It’s anticipated that the stock will fall further when they announce their third quarter results, that’s when a takeover move will be triggered” the source said.
ChannelNews has been told that the group will dump several consumer electronics lines along with appliances in favour of taking on Jaycar and Super Cheap Auto.
“The Asia based group believe that they can reposition Dick Smith as ‘The Gadget Shop’ with revenue being generated by selling products similar to what is being sold by Jaycar and Super Cheap Auto. Dick Smith has better locations and by focusing on technology and electrical products including toys it’s believed that they can turn the Dick Smith stores around”.