Woolworths has confirmed the sale of its struggling Dick Smith chain to ‘turnaround specialists” and private equity firm Anchorage Capital Partners, after almost nine months of searching for a buyer.
The retail giant announced in January it would offload the consumer electronics brand after a strategic review found investment in the chain was disproportionate to its profitability.
It planned to close up to 100 of 386 underperforming stores and sell off the rest. It shut down 74 Dick Smith outlets in the past year and will close a further 22 in FY2013.
In a statement to the ASX this morning, Woolworths said Anchorage would purchase 100 percent of the Dick Smith business, made up of 325 stores and 4500 staff, for $20 million.
Anchorage was first reported as a likely bidder by the Australian Financial Review in August.
Woolworths has spent $383 million net restructuring Dick Smith. The consumer chain has net assets worth $8.4 billion.
Despite the winding down of the brand, Dick Smith performed well in the 2012 financial year. It saw a 2.3 percent rise in sales to $1.5 billion - a jump its parent company attributed to store closure sales, clearances and promotional campaigns such as “Dick Does” and “Cheapest Ever”.
Woolworths as a whole didn't fare so well, suffering under the weight of its Dick Smith divestment with a net profit drop of 15 percent for its 2012 financial year. Excluding its $383 million net cost in restructuring Dick Smith however, Woolworth's net profit rose 3.6 percent to $2.2 billion for the fiscal year.
Namesake founder Dick Smith sold the chain to Woolworths in 1982 for $20 million.