Home > Latest News > EXCLUSIVE: Two More Senior Execs Quit Dick Smith Along With Institutional Investors

EXCLUSIVE: Two More Senior Execs Quit Dick Smith Along With Institutional Investors

EXCLUSIVE: Two More Senior Execs Quit Dick Smith Along With Institutional Investors

 Its shares fell more than 10% to $0.695, on top of yesterday’s pummeling and a 30% fall earlier in the week.

The latest executives to quit are Greg Hirsh merchandise manager who oversaw 2 buyers, also quitting the embattled retailer is Chris Borg, General manager of merchandise planning.

Earlier in the month 3 buyers along with Carl Bonham the former merchandising director quit Dick Smith. Before that Rod Orrock the former General Manager quit for health reasons.

ChannelNews understands that Greg Hirsh is heading to Masters and Borg to the Wesfarmers Group where he will work at Target in a senior role. 

Last week Dick Smith management circulated an email to staff warning them about talking to the media about conditions at the Company.
We have also been told that at least one other senior executive is talking to a retailer in the consumer electronics market.

On Friday several institutions moved to dump their shareholding in Dick Smith among them AMP and Deutsche Bank.

One Institutional shareholder told ChannelNews that the board was being pressured to dump current management who have been responsible for a significant slump in profits.

Click to enlarge
Nick Aboud CEO of Dick Smith is under pressure from Institutional Investors

Recent announcements by the Company show that like-for-like sales in the month were down 5.0%, with poor marketing decisions seen as producing a large reduction in traffic through Dick Smith stores who are now stocking a large volume of house brand products that the Company is struggling to clear. 

These private label products while having margins of more than 80% fail to deliver sales growth and are often an after though purchase.
Executives claim that promotional activity will now be ramped up in an effort to shift stock a move that some observers claim will lead to a discount ting war weeks out from Xmas.
Senior staff have told me that buyers who have been stopped from buying branded products because of cash flow problems are concerned that the business is “top heavy” with house brand products Vs in demand branded products.
Several Institutional investors believe that the current Dick Smith strategy raises doubts about the underlying capacity of the business
Many people believe that Dick Smith is struggling to differentiate itself from competitors and improve returns on invested capital to sustain medium term growth.

FNArena said recently that margin headwinds are being driven by higher promotional intensity and the cost of obtaining growth is rising.
There is also a bigger structural issues for the Company Claim’s Deutsche Bank who earlier today dumped shareholdings in the Company. 

They claim that omogenous products such as phones and tablets, and some TVs, are being sold widely by manufacturers as well, and price competition is fierce. Discounting is often led by one business and routinely followed by others to protect their market share, which means improving foot traffic may not be easy.

Deutsche Bank notes the strong phone sales in September following the launch of the new iPhone, although these are low-margin sales that are not contributing to profit growth.