AS TIPPED: Kogan Snares Dick Smith + Move Brand Names, 1M Customer Database + Online Operations
As we exclusively tipped last month the Dick Smith and Move brand names along with all trademarks and online operations as well as the names and address of over 1M Dick Smith customers has been sold to online retailer Ruslan Kogan, several Companies sought to buy the package.
The deal is set to be used to spearhead a $300M float by the online retailer, who still plans to keep his Kogan online brand. Currently Kogan is working with investment banks UBS and Canaccord Genuity to prepare a public float in the second half of this year.
Kogan has told executives from the receivers Ferrier Hodgson, that the Dick Smith brand name will have “more appeal” to investors when he floats despite the fact that it is seen as a failed brand.
Currently the Dick Smith online business is generating between $85 and $100 million a year.
The acquisition includes all online operations in Australia and New Zealand as well as the Dick Smith and Move customer databases, which could create problems for consumers who face being bombarded with emails from the Kogan operation as opposed to the prior Dick Smith Company.
The deal was secured after three weeks of negotiations with Ferrier Hodgson the receiver of the failed Dick Smith retail operation.
ChannelNews understands that Kogan has paid less than $10M to secure the deal.
What is not known is whether the acquisition of the tarnished Dick Smith brand name will impact his Kogan online operation, or whether large consumer electronic brands who sell the bulk of their product via Harvey Norman and JB Hi Fi will actually deal directly with Kogan who currently is forced to buy most of his branded stock from either overseas grey marketers, or distributors who are adding an additional margin over what JB Hi Fi and Harvey Norman pay.
ChannelNews has been told by one major retailer that representation has already been made to several key brands regarding the supply of stock to Kogan.
According to sources Kogan sees the Dick Smith brand as the centre pin of his planned float.
Kogan who refuses to make his financials available claims that the deal will boost his sales by $90M.
Kogan claims that Kogan.com is generating annual sales of close to $250 million however these revenues are unsubstantiated.
“Dick Smith is one of the most iconic Australian retail brands and we will be able to leverage the millions of dollars we’ve invested into online retail systems and architecture over the last decade to sustainably run the business,” Mr Kogan told Fairfax Media.
Mr Kogan acknowledged the damage to the Dick Smith brand since the retailer’s collapse in January and said he would invest to rebuild consumer trust and make Dick Smith’s online offer “better than ever.”
“Ultimately, a brand grows when it delivers on its promises. We will work tirelessly to exceed the expectations of every Dick Smith customer with a beautiful shopping experience,” he said.
