Home > Latest News > Former Woolworths Boss Slams Dick Smith Questions Asked About Same Store Sales Ahead Of Float

Former Woolworths Boss Slams Dick Smith Questions Asked About Same Store Sales Ahead Of Float

Former Woolworths Boss Slams Dick Smith Questions Asked About Same Store Sales Ahead Of Float

Simons now 88, has urged Woolworths management to persevere with its struggling BIG W and Masters stores in an effort to avoid the stores ending up in the hands of private equity investors such as Anchorage Capital.

He said that the supermarket chain that has seen a plunge in its share value was “nowhere near as bad as it was in 1987”, when he took the helm, and the decline in profits could be arrested with the right management.

  As far as Master is concerned he told Fairfax Media that there was room in the market for another major player, and Woolworths had already “done the hard yards” by investing more than $2 billion and securing more than 50 sites.

“I do not believe Woolworths is a sinking ship but it does need better management, which, no doubt, the new chairman will attend to,” he said.

Mr Simons urged new chairman Gordon Cairns not to bow to pressure to sell BIG W or Masters at fire sale prices and repeat Woolworths’ mistake in 2012, when the retailer sold Dick Smith to private-equity firm Anchorage Capital Partners for $94 million, only to see it floated 15 months later with a market value of $520 million.

Recently Dick Smith shares plunged from a high of $2.29 shortly after the float to yester trading at $0.80 late last week the National Australia Band, The Commonwealth Bank and Deutsche Bank dumped millions of dollars’ worth of share in the struggling retailer.

Questions are also being asked about same store sales running up to the float. It’s believed that concerns have been raised about the commercial buying of stock which has then been sold overseas but credited in Australia. 

ChannelNews is aware that a complaint has been made to a Government Department concerning the Commercial operations at Dick Smith. 

Mr Simons said that he plans to question the Woolworths board about the Dick Smith transaction at Woolworths’ annual general meeting on November 26, saying shareholders deserved answers.

He claimed a syndicate comprising a former managing director and senior executives of Dick Smith tried to make an offer for the business when it was put up for sale in 2011-12 but received no response and no information from Woolworths despite making repeated phone calls.

“It seems to me that those directors who were on the board at the time of the sale should be held accountable for their failure to obtain an appropriate price,” Mr Simons said.
“As shareholders we deserve an answer on it. When significant assets have been disposed of at less-than market price, it shows incompetence or lack of care.”

Four of the non-executive directors on the board at the time of the sale – Ian Macfarlane, Ralph Waters, Christine Cross and David Mackay – have departed this year but three – Jane Hrdlicka, Jillian Broadbent and Michael Ullmer – remain on the board.

Mr Simons told Fairfax Media that Woolworths should persevere with Masters and BIG W – “history shows the difference is of the management”.

“If people believe that BIG W is beyond help, it’s nowhere near as bad as 1987 … with the right management it can be improved quite a lot.”