DSE in Receivership

[South_Aussie_Hiker]

Dick Smith Electronics is now in receivership, with share holders looking at potentially only a few cents per share return.

The company hasn't been owned by Dick Smith himself for many, many years - having sold it to Woolworths in 1982, who then sold it in 2013 to Anchorage Partners.

Dick has been a great ambassador for the Australian wilderness, including starting Australian Geographic. He made the very well publicised donation to Tasmania for the PWS upgrade of Frenchman's Cap walking track.

He may well not care less, but even without any ownership, it must be sad to see something you built from scratch gone in the space of two years.

They were slow in moving to an online sales model, and were killed by retailers such as JB in the electrical entertainment sector.

Probably a good advertisement for bushwalking stores who will also continue to decline unless they compete on price with online and OS retailers. The dropping AUD might just be enough to keep some of those places alive and kicking.

[GPSGuided]

Was good in those days but he should have had a limit on the use of his name. They did change to DSE I guess but we all seemed to only know Dicky.

[neilmny]

How do you stuff up somethng that strong and very sad that it carries a connection to Dick's name. There's not many big knobs that matter much but Dick seems to be the real deal. Makes a good peanut butter and tomato sauce too!

[GPSGuided]

Corporate stuff up is easy. So much incompetence and self interests. As a news article pointed out, the sudden increase in the valuation from $80M to $500M was a born out of individual greed of those who took advantage of the situation than long term health of the company.

[Moondog55]

How to suck seed in business; take an excellent business model then change everything that made it work, then buy the only competitor and change its successful business model then have both of those companies chase the same dollar selling the same product at the same price then amalgamate those two failing businesses and continue with the same bad business model

[neilmny]

Holy crap------from http://www.abc.net.au/news/2016-01-05/d ... on/7067798

James Stewart - Ferrier Hogson -
"Dick Smith is one of the best known brands associated with consumer electronics in Australia and New Zealand," Mr Stewart said in a statement.
"We are immediately calling for expressions of interest for a sale of the business as a going concern."
"However, he also said that any outstanding gift vouchers held by customers will not be honoured and deposits will not be refunded.
Instead, consumers in those situations will have to stand in line with other unsecured creditors of the company and may only get a small fraction of their money back."
http://www.abc.net.au/news/2016-01-05/d ... le/7068268

There clearly needs to be some adjustment to the laws relating to gift vouchers and I assume the deposits were on lay-buys.
Not that this effects me but "*&%$#!!!!!!!!" They would have been happily taking peoples money for gift vouchers right up to Christmas Eve knowing that they were Fu#@$ed

[GPSGuided]

Here's an accounting analysis of the con job.

http://www.gemcapital.com.au/blog/item/ ... -time.html

[neilmny]

Is this all within the law GPS or are they shagged!

[GPSGuided]

Accounting 101, or rather 'how to beat a dead horse 101'. Suspect the key question would lie with whether all the financials were disclosed in the float prospectus and whether the backers of the float unduly influenced the various analysts and investment advisors. Suspect those backers weren't stupid and have to a degree covered their tracks.

[neilmny]

This is kinda scary to me.........I saw some really low crap in the eighties which heralded a big time "recession we had to have" (quote J Keating) complete with "J curve" (quote J Keating) recovery....blah blah blah.
I thought the days of this sh1t were past. In my years (61 off) these sorts of events seem to herald very rough times as over the ensuing months/years as more and more are revealed..............crap..............and at the risk of repeating myself......... *&%$#!!!!!!!!!!!!

[South_Aussie_Hiker]

It's all within the law, apparently - but hardly moral behaviour IMHO.

Those who bought in at $2.20 didn't do their homework and have been bitten savagely.

The non-replacement of stock, plus writing down of stock (so they could sell it at a "profit"), opening 15 new stores in a short timeframe - all designed to make the business appear to be making lots of profit while showing good growth potential.

Everyone dives in and ACP casually walk away with half a billion of unsuspecting shareholders money.

And they make it out like they turned the business around.
http://www.anchoragecapital.com.au/case ... ick-smith/

[Gadgetgeek]

I don't know what kind of store it used to be, but big electronics chains are dying all over. Radio shack in the US and Canada, Futureshop and best buy have been riddled with scandals, and are on the ropes.

Its difficult to maintain a store when it doesn't know what its supposed to be. I've only bought one product from dick smiths, and that was sort of a fluke, and such a bad experience I'm not sad to see them go. I've been to their stores several times, hoping to find something simple, like a watch battery, or similar, and never found what I was looking for. If you don't have the basics, what do you have? The rest of the shop was stuffed with cheap chinese crap, at reputable brand prices.

Its a bit shocking to me to see so many aussie companies struggling, but then have no web presence, poor customer service, and yet wondering why people will pay incredible markups to get products from some big south american river. So many products that I've wanted to buy that have fallen into the too hard basket because they were not available here, or the retailer couldn't be bothered to take my money.

As far as investors, and customers, I can bet someone will be making off like a bandit. Not honoring gift cards is a pretty grinchy move. This is what capital companies do. Legal, but very shady.

Nothing on the website but right down at the bottom in little letters, Receivers and managers appointed, in administration. I guess the best anyone can hope for is a good deal at the fire sale.

[GPSGuided]

Surprisingly, Jaycar has been doing well and even expanding to a degree. To me, they have completely taken over the niche of Dick Smith of old, manned by knowledgeable geeks than brain dead monkeys of current day DSE.

[neilmny]

....... Not honoring gift cards is a pretty grinchy move.............

Unfortnately this is the receivers doing this as people with gift cards and deposits are unsecured creditors......there job is to protect the lenders and this is as per the law.
I worked for a company in the eighties that went into receivership and I recall a discussion with one of the receiver's robots along the lines of (me) "what about my family and long service entitlements"....(robots reply) "what about the bank"!!!!!!! and the f#$%^&&er really meant it. My reply was "f#$#%%ck the bank....he was very shocked

[GPSGuided]

I worked for a company in the eighties that went into receivership and I recall a discussion with one of the receiver's robots along the lines of (me) "what about my family and long service entitlements"....(robots reply) "what about the bank"!!!!!!! and the f#$%^&&er really meant it. My reply was "f#$#%%ck the bank....he was very shocked

Blame bankruptcy law.

[neilmny]

I worked for a company in the eighties that went into receivership and I recall a discussion with one of the receiver's robots along the lines of (me) "what about my family and long service entitlements"....(robots reply) "what about the bank"!!!!!!! and the f#$%^&&er really meant it. My reply was "f#$#%%ck the bank....he was very shocked

Blame bankruptcy law.

For sure GPS I realised he was just doing what he was obliged to do by law............didn't make it anymore palatable though.
.......these are big impact events for employees..........I don't remember the year but I still remember his name and still remember his face.......
I feel sorry for the DSE employees who will likely be f'ed because IIRC the tax man comes first, the bank second (secured creditors), the employees third, the credtiors last.

[Overlandman]

I also feel sorry for DSE employees, for customers with gift cards
and customers that had paid cash for an item not in stock & wont get t or their money back.

For me walking into DSE is like walking into Katmandu. I browse but tend not to buy anything.

Dick is not happy, there are several threads going on the aviation sites I look at where, he is a forum member.

Regards OLM

[Gadgetgeek]

I get that its legal, just wondering how many christmas gift cards are still out there. If Jaycar can keep going by supplying components and DIY/Maker stuff, they will do well. That market is hard to fill, now all they need is a usable website, If it wasn't for a crappy location, I'd be at my local one far more.

[photohiker]

When our kids were young, we used to regularly visit Dick Smith stores, esp the one in Adelaide under the Myer centre. They used to sell a wide array of electronic kits, parts, books, toys and other stuff like low end phones and cameras. After the sale, the hobby stuff hit the bin and they went with big name brand TV's etc and basically lost the interest of the kids. We just moved to visit Jaycar instead, they were doing what DS used to do, and more.

Dick Smith could have been a mainstream Jaycar but it decided to jump into competition with Harvey Norman and JB as a retail home electronics store . They still sell trinkets but nothing like the range at Jaycar.

If you take over a retail chain and change it's direction, you better be very sure you can bring your customers with you.

RIP DSE

[Overlandman]

Coles & Kogan to honour DSE gift cards.
Well done

http://www.abc.net.au/news/2016-01-08/d ... rs/7076938

[GPSGuided]

Odd publicity move.

[photohiker]

DSE is in a tail spin.

Competitors are grabbing the easy pickings as much they can.

[Gadgetgeek]

Makes sense for Kogan to try to get more people knowing about them. Unfortunately I've not been impressed with kogan's products or service. I don't know how long they have been around for.

As for Coles, it makes sense from a customer service standpoint, people will be associating the failure with coles, not DSE, and having a big dog stand up for them will make them feel better about Coles. That and Coles has a far better chance of seeing some return, as a lumps sum payment won't get eaten by fees, where as on an individual basis, its much harder.

[GPSGuided]

Guess it was Woolworths that flicked DSE to the private equity group and doing this will make Coles look good. Still, not that convincing.

[Gadgetgeek]

Its an obvious PR move, but one that will get them a few points. At this point they both will take any bite out of the other that they can.