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Woolworths sells Dick Smith for $20m

Discussion in 'General Chat' started by Lorenzo, Sep 27, 2012.

  1. Lorenzo

    Lorenzo Membership: VIP

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  2. snoopy

    snoopy Membership: VIP

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    325 stores and probably most need to be closed, or soon will.
     
  3. Chris.C

    Chris.C Membership: VIP

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    At $20 million a struggling business like Dick Smith's which is in a tough industry with a lot of online competition and doesn't have any obvious sustainable competitive advantages and isn't growing nor making money is still going to be really hard for even the most skilled private equity group let alone flip for a profit...

    I think this might be end for Dick Smith's.
     
  4. smee

    smee Membership: Community

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    New owners will probably look to the Kogan experience and do likewise.
     
  5. findtim

    findtim Membership: VIP

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    auDA Member:
    Yes
    i'm surprised it lasted this long, i surprised someone paid for it? it was a GREAT business in its time and dick smith got out at the right time from then on in its been a slow death.

    i don't think they can "re invent " this thing, in the @ $15k i have spent in electrical products in the last 3-4 years i would say @ $150.00 went to dicksmith and thats only because i just wanted in and out

    and EVERY time i went to buy significant items eg: laptops, i went there first because its close to my home, i then go to "the good guys" which is down the road, then JB hifi and then retravision (next door) the into harvey norman, all this is within 1km of each other, i then pick what i want and tell the harvey norman guy what i will pay, i have NEVER been rejected.

    its a good deal ( out ) for woolies, can't wait to see what happens

    tim
     
  6. Lorenzo

    Lorenzo Membership: VIP

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    Yes margins are too low and with increasing competition from overseas, most of their staff will be looking for a new job soon I think.

    I think the future will be with display stores only for the biggest online retailers, then everybody will buy online.
     
  7. payattention

    payattention Archived Member

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    If you price comparisons lead you to purchase at HN, you're doing it wrong.
     
  8. findtim

    findtim Membership: VIP

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    auDA Member:
    Yes
    you are right but i'm old school and i do need to change, for some reason i still want to talk to a person, there is so much in your statement that its impossible to write about, there are other posts that debated HN's existence so i'll leave it to that thread.

    i would have to say i am a swing voter, sometimes i buy online other times i actually like going into a store, i think all we are seeing is the typical bell curve of a product and that product is "buying online" but this time i doubt there will be a downside to the bell.

    tim
     
  9. johno69

    johno69 Membership: VIP

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    auDA Member:
    Yes
    I love talking to people. It's so cool when they try sell you something they have no idea about and you ask the right questions.

    Reminds me of the email I keep getting saying my site isn't ranking in Google and I should enlist their SEO services. Some people have no idea.
     
  10. acheeva

    acheeva Membership: VIP

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    There was a recent article that still rated Dick Smith as the place to go when you wanted advice. The brand still has value!

    The Hogan & Gizmo models can still overlay the "stronger" stores to create a today business

    I here very little about Dell these days; possible due to the poor after sales service

    I think that the Dick Smith brand can still thrive with its reputation for sales and after sales service

    $20m is not much, given the number of stores, the fit out costs, the brand & (I suspect) a base level of stock
     
  11. findtim

    findtim Membership: VIP

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    you couldn't buy the fitout for 61K, but the sq mt rent would be killing them
     
  12. Chris.C

    Chris.C Membership: VIP

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    And I imagine the average store has more than $61,000 of stock in them...

    Probably would be able to make a decent return just going and listing all their stock on ebay and having a going out of business sale.

    :eek:
     
  13. acheeva

    acheeva Membership: VIP

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    They have had a good property strategy; most stores are highly visible with good access on the fringe

    Not many "mall" shops
     
  14. findtim

    findtim Membership: VIP

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    Yes

    don't we see the EX pizza hut restaurants everywhere ! i think there are ghosts inside as every business that takes up the lease seems to die

    tim
     
  15. acheeva

    acheeva Membership: VIP

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    Food & electronics are soooo different

    BTW....we are seeking Red Rooster scaling back there stand alone stores too
     
  16. Cooper Mills DomainLawyer

    Cooper Mills DomainLawyer Membership: VIP

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    auDA Member:
    Yes
    I agree with Greg, the Dick Smith name still has significant value even if the business isnt making money - they have been slow to adapt like DJs (that is why their latest profit results showed a hammering).

    I think if Dick Smith is stripped down to its high revenue generating stores (close the majority of them) and boosts its online presence they can still do well and turn a profit
     
  17. snoopy

    snoopy Membership: VIP

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    I think if it came down to it it would cost a significant amount of money to close stores down. Not that I know anything about running a shop but there would be broken leases, staff to pay out and the like. I suspect it would far exceed $61,000 per store. No idea how many stores they need to close but if it is say half I would think that might cost more than $20 million. The real cost of what they are taking on is probably pretty significant in my view.

    Regard the shop fitout costs some people mentioned as having value, that is worth zero for an unprofitable store, it is a sunk cost, skip bin fill.
     
  18. findtim

    findtim Membership: VIP

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    Yes
    obviously someone has a plan, you don't get 20mil without a plan.

    devil's advocate:

    i just hope that the change of ownership hasn't been created so long term employees are now able to be screwed over on payouts because its a new company.

    i've had dealings with this type of "strategic move" before and it took a LOT of work to get guarantees for current employees before selling the company.


    tim
     
  19. James

    James Membership: VIP

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    They will close down the low performing stores and cut back staff for sure, I still think the investment is decent but I agree with the comments about Kogan. I think the brand equity in the market is still worth something as said.

    That been said Woolworths is a very big operation if you have ever been to their head quarters at Norewest you will realize how big they are, they have acquired many businesses over the years so I guess 1 or 2 going bad is not that bad for their overall profit levels.
     
  20. djuqa

    djuqa Membership: Trader

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    Silliest thing they could do.
    Dick Smith (The Man) founded an empire based on selling to hobby and business users of electronic devices and components. A large section of the business was selling communication products (CB, Marine, Amateur Radio and related activities).

    Woolworths decided a soft fluffy toy and consumer Electronic gadget business model was a better business model and lost a S***Load of money.

    New owners have indicated that they intend to re-open some of the already closed stores.

    Hopefully they will also re-introduce the HIGH profit items that Woolworths dropped soon after their original purchase.

    Disclaimer:-
    I have no pecuniary interest in any company associated with DSE past or present.
     
    Last edited: Sep 28, 2012