“This reaffirms that the Dick Smith growth strategy is working.”
The now famous last words of Nick Abboud, former CEO of Dick Smith, speaking six months before his departure, and eight months before the folding of a company founded 48 years ago.
For the iconic retailer rejoiced at investments in new stores and shop formats in only August of last year, following a positive financial performance with sales rising 7.5 percent to $1.3 billion in 2015.
Fast forward to February 2016 and the picture looks much bleaker for the brand, which will soon cease to exist after failing to find a buyer for the embattled business.
The result? The loss of around 2,460 staff in Australia and 430 in New Zealand.
So, where did it all go wrong?
Many believe the writing was on the wall in early December, when the ASX issued a somewhat cautious outlook before Christmas trading, following a $60 million inventory write-down.
Prompted by a disappointing October performance and a below-par November, the company officially went into receivership on January 5, appointing James Stuart, Ryan Eagle and Jim Sarantinos from Ferrier Hodgson as receivers.
In response to the move, the market rallied around to help stranded customers, with Coles, alongside online stores Kogan and Mwave.com.au, launching gift card trade-in schemes to help customers following news that outstanding gift vouchers wouldn’t be honoured.
While allowing customers to swap gift cards or vouchers for in-store credit helped appease the industry, it did nothing for the company itself as CEO of three years Nick Abboud tendered his resignation.
To facilitate the change, the receivers brought in Don Grover as interim CEO, a 30 year retail veteran with experience working for Fusion Brands, Dymocks and David Jones.
With 40 expressions of interest from potential buyers already on the table by January 12, the debt recovery of $390 million - of which Ingram Micro Australia and Synnex Australia are rumoured to be owed a part of - seemingly took a positive turn.
Unsurprisingly however, receivers swung the axe just ten days later, closing down 27 of its stores and terminating the employment of 181 employees in Australia.
And then, the wheels truly came off.
In early February, receivers analysing the books of the struggling retailer estimated an underpayment of $2 million, involving 3,200 current and former employees dating back to 2010 in Australia.
Impacting only Australian employees, with New Zealand unaffected at the time, a further 22 support office jobs were also cut, alongside the high-profile departure of CFO Michael Potts.
Now, during the next eight weeks, 301 stores in Australia and 62 outlets in New Zealand will close down, impacting 2,460 staff in Australia and 430 in New Zealand respectively.
"The company explored alternate funding, however the directors formed the view that any success in obtaining alternative funding would not have been sufficiently timely.”
That’s the official line from Chairman Rob Murray, and now for sure, the last words of the fallen retailer.
