End Of The Line for Dick Smith stores to close after receivers unable to find buyer
Dick Smith stores across Australia and New Zealand are expected to close over the next eight weeks after its receivers were unable to find a suitable buyer for the company.
- Closures will result in loss of 2,460 staff in Australia, 430 in New Zealand
- Receivers did not receive any "acceptable" buyer offers
- Employee entitlements expected to be paid in full
The remaining 301 stores in Australia and 62 in New Zealand will close, resulting in the loss of 2,460 staff in Australia, and 430 in New Zealand.
In a statement to the Australian Securities Exchange, receivers Ferrier Hodgson said it was a disappointing outcome.
"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 standalone businesses," receiver James Stewart said.
"The offers were either significantly below liquidation values or highly conditional or both."
The receivers said all Australian employee entitlements would rank as priority and are expected to be paid in full.
Forager Funds Management chief investment officer Steve Johnson told the ABC it was a terrible time for those who worked to turn the situation around.
"There was some hope, but when you go into receivership you have a matter of weeks to sell the business," he said.
"The longer this went on the more likely [you are] to see a liquidation rather than a sale."
He said there were offers from buyers but they were far below what the receivers thought they could get from liquidation.
Dick Smith 'did not fit into retail landscape'
Mr Johnson said the closure was an indication of the tough market, and that the brand did not belong.
"The Dick Smith business does not fit into the Australian retail landscape, it's been in decline for a long time," he said.
Mr Johnson said there were businesses going bust "all over the place" but because this was a recognised brand name, it gained more attention.
Last month the electronics retailer went into receivership after sales and cash generation were below expectations in the key December trading period.
Dick Smith said at the time the directors were unable to secure support from the company's bankers to provide finance for restocking to see it through the next month to six weeks.
That prompted them to appoint McGrathNicol as administrators to run the firm while restructuring or sale options were explored.
However, after the appointment of administrators, Dick Smith's lenders appointed receivers, Ferrier Hodgson, to run the firm and protect their financial interests.
Earlier this month the Fair Work Ombudsman launched an investigation after evidence emerged the failed chain might have underpaid its employees.
Ferrier Hodgson discovered the discrepancies, worth as much as $2 million.