3,300 jobs at risk across 393 stores – ConspiracyOz

Dick Smith receivers say gift vouchers and deposits will not be honoured

www.abc.net.au

5th Jan 2016

DSE Gone
Photo: Administrators have announced Dick Smith gift vouchers will not be honoured. (AAP: Julian Smith)

Dick Smith customers who have paid deposits on goods or bought gift vouchers will not have either honoured by the company’s newly appointed receivers.

The iconic electrical retailer has been placed in receivership, leaving affected customers as unsecured creditors and around 3,300 jobs at risk across 393 stores.

‘Gift cards are unsecured loans to the retailer’. Hadn’t thought of them that way. Ouch! https://twitter.com/mpesce/status/684183648052969472    12:30 PM – 5 Jan 2016

 

In a statement, receivers Ferrier Hodgson announced that due to “the financial circumstances” of the company, “unfortunately” outstanding gift vouchers would not be honoured and deposits not refunded.

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.

Many Dick Smith customers vented their frustration on social media.

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Choice spokeswoman Erin Turner said some customers would naturally feel nervous about their chances of getting their money back.

“Dick Smith is an iconic company and a lot of its customers may be feeling anxious,” Ms Turner said.

“It’s important for customers to remember they do have rights.”

She said consumers who had purchased gift vouchers or placed a deposit on an item using a credit card or the credit facility on a debit card may be able to receive a refund through a process called “chargeback”.

“They should contact their bank to find out what their options are,” Ms Turner said.

Customers with faulty goods should contact manufacturer

She said customers who purchased goods over Christmas and had since discovered the items were faulty still had rights under the Australian Consumer Law.

Those laws state a product must be “fit for purpose”.

Customers unable to obtain an exchange or refund from Dick Smith should contact the product’s manufacturer.

She said those customers who paid with cash or cheque should register with the administrators McGrathNicol and fill out a “proof of debt form”.

“It’s a long process and they are normally at the bottom of the company’s creditors,” Ms Turner said.

“There is no guarantee that customers will receive a refund as it will depend on the state of the company, but it is worth going through the process.”

Ms Turner said product warranties provided by the good’s manufacturers were generally not affected.

Dick Smith Holding’s operates 393 stores across Australia and New Zealand under four brands, Dick Smith, Electronics powered by Dick Smith, Move and Move by Dick Smith.

Shares in the company plunged 83 per cent over 2015, largely due to profit downgrades in October and November.

Dick Smith halted trade in its shares on Monday as the company sought to refinance its debt. They last traded on December 31, 2015 at 35.5 cents.

Dick Smith: What went wrong?

Private equity group Anchorage Capital bought Dick Smith from Woolworths in 2012 for an initial payment of just $20m.

Anchorage then “dressed the company up to look good for just one thing – to persuade people to but shares,” according to analysts from Forager Funds Management.

Anchorage “wrote down the value of the inventory, took provisions for future onerous lease payments, wrote down the value of the plant and equipment and liquidated a lot of the inventory as quickly as they possibly could to throw off cash,” according to Forager’s Steve Johnson.

The cash was then used by Anchorage to effectively make Dick Smith ‘buy itself’.

The writedowns inflated profits, a key factor in enticing investors into the company.

For example: a stock item that may have been bought for $100 may have been in the books at $60 after the writedowns, which meant an extra $40 profit on every sale.

The writedown of plant and equipment lowered depreciation charges, also boosting the bottom line.

“But when they liquidated all that inventory to pay for the purchase price, they didn’t replace it,” according to Forager’s Steve Johnson.

“And the new owners of the business, since it’s been listed on the stock market, have had to put in a lot more money to fund the increase in inventory.”

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Posted on January 5, 2016, in ConspiracyOz Posts. Bookmark the permalink. 1 Comment.

  1. Mmm I remember the Redhead Matches DS copied called ‘Dickheads’ full circle eh! – Mick Raven

    Like

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