EXCLUSIVE: Dick Smith Dying Days Financials Revealed
David Richards
01 Mar 2016
Nick Aboud the former CEO of Dick has told Anchorage Capital executives that Dick Smith should never have been placed onto receivership.
However, the accounts exclusively obtained by ChannelNews reveal that the retailer was bleeding losses in the six months prior to December when Aboud admitted that the Company was in trouble.
In the Six month to December Dick Smith lost $164M million before interest and tax as sales slumped 5.4 per cent to $200.1 million.
At the same time the cost of running the business soared 69 per cent to $71 million.
In October Nick Aboud and former Marketing Manager Neil Merola who has since had his mobile disconnected, openly lied about the situation at Dick Smith.
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| Former Dick Smith CEO NIck Aboud loved to get media attention but he failed to tell the truth. |
In late October I had a face to face meeting with Aboud, I put it to him that the Company was making losses. He said “No that is not true, we are tracking okay”.
I also put it to him that he was struggling to pay vendors and that costs were blowing out, he said “We had some problems but that is under control”.
Neil Merola the then marketing director was even more blatant when asked about the problems that were emerging at Dick Smith.
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| Marketing Manager at Dick Smith Neil Merola dismissed the suggestion of losses in October as “Bullshit”. “Who is feeding you this rubbish he said. |
When asked about falling profits and staff retrenchments he said “It’s all bullshit, who is feeding you this stuff. If you ever have a problem, don’t write it, about come and see me”.
Both Merola and Aboud are ex senior Myer executives.
The accounts reveal that in November Dick Smith made a loss of $60.5 million in November on sales of $85.2 million.
The mounting losses and a lack of faith in the management of Dick Smith resulted in both the National Australia Bank and HSBC calling in the receivers in January.
Last week the banks knocked back a $70M offer by the Chinese retail group 5 Star.
Ferrier Hodgson recommended that the offer be taken up by the banks.
The banks claim that there were too many conditions associated with the offer and immediately placed the Company into administration.
Another consideration was that Dick Smith only had $31.2 million in cash at the end of December and this was fast running out as the Company failed to attract consumers to the Dick Smith stores which Gerry Harvey had described as “crap stock”.
