Dick Smith Goes Into Voluntary Administration

Australia's landscape of retailers with their toe in the world of video games and electronics is beginning to shrink a fraction today, with reports coming out that Dick Smith has entered voluntary administration and a trading halt.

Business Insider reported this morning that bankers for the retailer, which launched a mammoth firesale weeks before Christmas, appointed Ferrier Hodgson to be Dick Smith's receiver. Advisers and insolvency specialists McGrathNicol were also supposedly appointed as administrators.

The savage discounting over Christmas was supposed to help Dick Smith through the holidays and help clear an excess of stock, but the retailer's chairman, Rob Murray, said sales were fewer than necessary. "The directors formed the view that any success in obtaining alternative funding would not have been sufficiently timely to support short-term funding requirements and allow the company to order required inventory during the next four to six weeks."

The Australian noted that Dick Smith's firesale resulted in the company issuing $60 million in writedowns. Dick Smith is currently running a one day online sale with various coupons, but the terms and conditions state that consoles, software, accessories, Xbox Live, PlayStation Network cards, laptops, and App Store gift cards are excluded.


Comments

    They gave me an amazing price on my PS4, then haphazardly slapped a sticker with my home address on the side if the box so any old human with eyes could identify it.

    Thank schmod I was home with a sick kiddy that day, I may never have seen it!

    Seeing as they are not honoring gift cards or refunding deposits...what makes them think that customers are going to risk buying something off their online store and risk it never turning up??

    Goodnight Dick!

    Last edited 05/01/16 12:44 pm

      Those are common first step procedures of administration firms, should be safe to order online.

      Last edited 05/01/16 1:07 pm

        I can understand not refunding deposits but I don't see why they can't honor gift cards.

        Still can't trust them.

          That's totally your decision =) just wanted express the actions are rudimentary insolvency procedures.

          Gift cards are essentially a form of credit extended to the customer. Insolvency means that unsecured creditors have to stand in line behind banks and the like who generally have security over a company's assets. Administrators and receivers will sometimes keep operating the business on a limited basis but they will usually only do so on a 'clean slate' basis, because they are personally liable for any debts incurred by the company that aren't paid. Using company assets to fulfill gift card redemptions would technically go beyond what a receiver or administrator is authorised to do by the deed of appointment or the Corporations Act.

      yeah this is typical of administration. when Borders went under, you had to spend double the gift card's value to use it (you had to buy $40 to use a $20 gift card for example), and when Babyco went under lay buys were worthless and they refused to refund deposits.

      Hang on, I'm pretty sure that by law they can't refuse a gift card if it's valid.

        Apparently they can once the receivers have been called in.

          Sevrin is correct, with gift cards you are considered a unsecured creditor by law, you may get your money back but you are very low on the list of priorities. usually along the lines of::: liquidity firm>employees>secured debts>creditors/share holders>you as you can see it usually gone before it reaches unsecured.

            Hahaha, shift employees down to just above the consumer and you're correct. I was with GAME when it went under, and they basically lied to us about bonuses to get us to do things properly right until the end. As a casual, I was lucky to even get paid for the last weeks, let alone that bonus for 'not-stealing-stuff-not-in-the-inventory"

        A gift card is essentially you (the customer) giving an unsecured loan to the retailer to be redeemed for goods at a later time period.

        Once a company goes in to administration you get lumped in with the all the other creditors who are owed money/goods. The administrator will negotiate with all the creditors to pay off the debts, starting with the largest creditors as well as those who have secured debts and working their way down until the money runs out.

        Since your gift card is likely to be for a very small sum of money chances are usually very high that the money will run out long before you get a chance to claim on your gift card or they'll offer you a paltry 33 or 50 cents to the dollar.

    So they exclude sales on the things alot of people would want to buy, while marking down the stock that doesnt move because people have stopped buying stuff from brick and mortar dedicated technology shops? Hence the reason why DS has been on the road to oblivion for more than a decade.

    Apart from terrible mismanagement of advertising, sales and promotions that resulted in what may have been terminal damage to their reputation as a retailer, they have never properly adjusted to the new business landscape of the internet. They aim a lot of their core products at technological savvy customers, who will generally buy things off of the internet cheaper that what they sell at, they no longer have technology literate employees so they lost a competitive edge there (I once had a DS staffer in their IT area ask me what a trackball was...). While it is sad that a lot of people are going to lose their jobs, the simple fact is that DS was a slow moving train wreck 8-10 years ago, and the company that bought them off of Woolworths not so long ago just managed to buy the biggest lemon in the retail industry, and should have known better.

      It was all downhill after they went from being a store for electronics hobbyists and professionals to just selling consumer products. Jaycar pretty much dominates that space with brick and mortar stores now.

        As an ex dse staff member when it was electronics.... this 100000%

        Used to go there all the time when they were the electrical hobby store in shopping plazas. Then they tried to be a mini harvey norman

          Jaycar actually tried that but reverted back with a big apology by the managing director in thr following years catalogue

      The company that bought DSE from Woolworths knew it was a lemon but still made a huge amount of money from it (paid very little and then floated the company for half billion dollars)

      http://www.smartoffice.com.au/business/retail/83U48VDB-comment-why-asic-needs-to-move-on-dick-smith-today-before-information-disappears.aspx

    I worked at Dick Smith in the mid-2000s when Woolworths owned it and could see this coming from then.

    Such a horribly mismanaged company and the Victorian branch at least was run by a foul boy's club who treated their staff poorly are were motivated by nothing more than reaching the KPIs they needed for their bonuses.

    Sad to see it go that way and now even further downhill. Dick Smith stores were always lots of fun when I was a kid, it's a shame they moved out of specialist electronics and became more a bargain basement for cheap AV and computer accessories.

    Last edited 05/01/16 12:52 pm

      In New Zealand, they never quite recovered from online shopping. They were still trying to sell their $25 mini USB cables that you can pick up for $5 on any online store or auction site, well after buying online had become a cultural norm.

      Their exploitation market had pretty much shrunk to people who seem proud to be "not very good with computers".

      It just left them selling the same brands and stock at the same prices as everyone else, but with smaller stores and a "nerd" taint

      Mate, the Queensland branch was not much better. Worked from 2000-2003 in DSE and it was just as you described.

    I just had a quick look on the site and really didn't see anything worth mentioning. I would have thought there'd be way better deals available somewhere on there.

    I heard there was lots of reports of staff hoarding, saving items for friends or buying the items on sale with staff discounts which limited the amount of stock available to the public.
    Im not sure how much that would affect sales since at the end of the day a sale is a sale.
    I think the article was on ninemsn.

      Aged stock selloff is to get rid of stock. The retailer isn't advertising it to give you a deal, they want it gone. If staff see it first, why shouldn't they buy it? Not to mention the discounted items list was a leaked internal document, not an advertised list.

      Last edited 05/01/16 1:39 pm

        I was just speaking from my stint in retail where withholding stock could be considered a termination offence.

          As long as they're buying it, it's not really withholding anything is it?

            Presumably the staff discount was intended for when stock is plentiful. When there is limited stock, the discounted sale to the employee comes at the expense of a sale to a customer at a higher price.

            For a company that has just gone into administration, why wouldn't they consider this a bad thing?

              I'm assuming the discount is the same as it was when they were owned by Woolworths, and if so, the discount would be 10%, the same as when I worked at Woolworths, meaning there's not a hell of a lot of difference whether it was purchased by Staff or Customers.

                If it is 10% of the retail price, that's going to be a lot more than 10% of the profit.

                If Dick Smith bought a product for $50 and was selling it for $100, then the 10% staff discount is a 20% reduction in profit (from $50 to $40). The smaller the retail markup, the larger the difference.

          No different here, but coming in to work earlier than your shift and buying stuff? Nothing wrong with that, and a sale is a sale. Also staff had the same right to reserve stock as the public. During clearance that wouldn't be anymore than end of day.

        If you can sell off aged stock and purchase a bit of goodwill in the process, then it's perceived as a win-win. If your staff purchase it that opportunity is lost. That's why upper management wasn't happy. The store actually lost what little goodwill is had left in the process.

      When I worked at dicksmith I was not allowed to hoard anything for myself. TBH customers would end up getting better deals then me as all staff only get a 5% discount (applies to all Woolworth related employees). Where as a customer can just haggle shit down, If I tried this with my boss I would be told to gtfo lol.

      then again I think it depends on how well the store is managed.

      Though there was one time I remember when the iPad 2 was released, no one was allowed to sell them besides the managers, this was so that they could reap in all the commission.
      Also Apple only supplied our store with limited stock (on purpose for scarcity hype) we were ordered not to tell the people that had lined up that we had sold out or that there was only a very small number available. was like only 20-30 ipads with a line of 200+ people...

      fuckers

      Just remembered that someone from Allure/Gizmodo had contacted me a year or two ago to do some kind of story from when I worked as DSE, I replied back then but never heard back haha.

      Last edited 05/01/16 4:49 pm

    They got out of the video game selling biz a while ago, my last game from them was Shadows of Mordor

    i used to buy electronic components from them, then they stopped selling them.
    I used to buy my computer games from them, then they stopped selling them.

    Last time I walked into a dick smiths there was nothing there that interested me.. Little surprise they went broke.

      Yep, out of old habit I sometimes wander in, having forgotten the desolate wasteland it has become.

    Damn... who's going to replace them for saturation-bombing Allure sites advertisements/advertorials?

    I feel bad for anyone who put a deposit down on a big ticket item in the boxing day sales. I don't think even the threat of jail could physically stop me from walking into a store and walking out with my product if this happened to me.

    Dick pulls out.

      Used to work there. Was sexually harassed by my AM, customers were rude, stock was scarce. Haven't worked there on almost a year and we knew it was coming. 13 staff left my my area the month I did. Biggest complaint was management being greedy assholes.

      EDIT: Dang it. I posted this in the wrong area :(

      Last edited 05/01/16 2:57 pm

    Should have put a bullet in the chain years ago. They dropped right out of relevance once they gave away the hobbyist market to Jaycar and pivoted to be a third rate JB Hifi.

    An expression of shock is etched on my face.

    This is somewhat surprising honestly. I got my PS4 from them online last year in a 24 hour sale and it arrived the next day.

    Will be a pity to see the chain die off.

    Last edited 05/01/16 2:36 pm

    Used to work there. Was sexually harassed by my AM, customers were rude, stock was scarce. Haven't worked there on almost a year and we knew it was coming. 13 staff left my my area the month I did. Biggest complaint was management being greedy assholes.

      Rude Customers are just a part of Customer Service. Sad but True.

        These were DSE/DJs customers. Horrible people who thought they were too good for you. I'm used to bad customers, but having people like that day in day out with no back up (single man departments) sucked ass.

    Went in their the other day for a new logitech keyboard. They wanted $220 for it when everywhere else (even EB games) as selling it at around the $140-$150 mark lol Seemed out of touch with their own market

    Last edited 05/01/16 4:23 pm

    I hope it all just folds. Good riddance to a useless store that doesn't know how to keep up.

    What do they sell these days? A few computers, a few TV's, a few coffee machines and a shitload of overpriced accessories to with said computers/TV's.

    I remember the last time I went in there looking for a new keyboard there was a notice up that said '50% off all marked Logitech accessories'. Not a single product they had was marked :l

    The pre-Christmas firesale was a load of BS. The staff picked all the goodies, most of the popular goods weren't even discounted (near or even original RRP FFS) and the stuff that was discounted was the crap Dick Smith couldn't move because no one wanted it.

    Last edited 05/01/16 4:43 pm

    Awhile ago, my Friend and I noticed you saved $20 if you Pre-ordered at Dick Smith, so we did (I forget the game (Possibly Sunset Overdrive)) Come release day they don't actually have stock, when we decided to cancel they kept complaining that a Pre-order was a contract and we can't just back out. And kept asking us if we where sure we didn't want to wait it would only be a week. EB price matched them and had stock, even gave us the Pre-order bonus. First and Last time I bothered to even attempt a Pre-order at DS.

    I don't know what market Dick Smith was after, It appears neither did their upper Management. The last thing I purchased from them was a cover for my Tablet, which was out of Stock at JB where I actually bought the Tablet.

    DS in Whiftords city (Perth) is selling coffee machines and vaccumm cleaners. bizzare

    Good. Karma for not giving me a refund when I bought an empty box years ago. As a young male I must've been up to something.

    Riddance

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