The new parent company of consumer electronics chain Dick Smith has revealed no stores will close under its ownership, with previously-planned store closures to be reversed.
Woolworths this morning announced it had sold the struggling chain to ‘turnaround specialists’ and private equity firm Anchorage Capital Partners for $20 million.
Woolworths had initially planned to close 22 stores in the financial year 2013 following the closure of 74 in FY2012.
Anchorage will reverse that decision and keep all stores in operation under its ownership, and plans no further staff redundancies.
CRN understands the chain will continue to operate under the Dick Smith banner, and there will no significant changes to the store format.
Anchorage has appointed former Myer stalwarts Nick Abood and Bill Wavish to head up the new Dick Smith division, appointments that may result in ‘nuanced’ changes to the business after initial evaluation.
A source told CRN that Anchorage had purchased the struggling chain under the belief it would be more successful with a dedicated focus, rather than being under the umbrella of a larger, multi-brand retailer.
“Woolies is acknowledged as one of Australia’s leading retailers but Dick Smith was different to the rest of the group," the source said. "Taking Dick Smith out of that environment, out of a public company, will remove a lot of the pressure and constraint it has faced as part of a large public business.”
Woolworths in January announced it would offload the brand after a strategic review found investment in the chain was disproportionate to its profitability.
Dick Smith goes into the merger with $290 million in net assets, according to Anchorage.
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.