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Defunct Dick Smith, David Jones Deal Was ‘Lipstick On A Pig’

Defunct Dick Smith, David Jones Deal Was ‘Lipstick On A Pig’

Several Hi Fi and AV suppliers have approached David Jones directly after Ferrier Hodgson announced that the deal that saw Dick Smith flogging CE products in the department store would end this week.

Negotiated ahead of the float of Dick Smith by former CEO Nick Aboud, the deal only delivered 3% of Dick Smith overall revenue, it also resulted in Dick Smith paying David Jones a minimum sales guarantee.

The deal that was flawed from the start was used by Both Anchorage Capital and Dick Smith management to spruik the growth of the consumer electronics retailer ahead of the December 2013 float. At no stage did Aboud reveal the financials associated with the deal or whether the deal would actually deliver an upside for Dick Smith.

As part of the deal Dick Smith was forced to take over liability for millions of dollars’ worth of ageing stock that included plasma TV’s that were up to three years old aging Hi Fi systems and old iPod docks.

The deal that ends on Wednesday, January 27 is believed to have cost Dick Smith several million dollars.

Since the deal was negotiated David Jones which was struggling at the time of the deal being signed has been sold to Woolworths Holdings a South African Company who ChannelNews understands was approached to look at buying the Dick Smith retail chain which is now in administration with debts in excess of $400M.

The offer was rejected.

The latest results from the department store’s South African owner, Woolworths Holdings, put like-for-like sales growth at 9.7 per cent while retail space increased by 1.5 per cent.

It’s understood Christmas sales at David Jones were significantly stronger in 2015 than 2014 and the 26-week result does not include the January clearance sales, which could further bolster the sales figures.