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Neil Merola: Former Dick Smith Strategy Director Now Business Consultant

Neil Merola the former Director of Marketing and Strategy, at the now failed Dick Smith is today peddling his skills as a business consultant despite having a questionable retail track record during his time at both Myer and Dick Smith.

Merola who liked to be seen as Mr nice guy, among vendors and suppliers has been accused of being the being the man that created the environment that led to Dick Smith collapsing with debts of over $400M.

A close friend and former business associate of Nick Aboud the former CEO of Dick Smith, Merola joined the now bankrupt retailer from Myer where he worked as Business Development Manager.

At the time of joining Dick Smith Myer were struggling to hold onto market share with both revenues and profits slumping with former management blamed for a lot of the problems that Myer were facing.

As Marketing and Strategy Director at Dick Smith, Merola, whose actions are now being investigated by the Australian Securities and Investment Commission was responsible for implementing strategies that have been slammed by both suppliers and fellow retailers.

Earlier today, JB Hi Fi CEO Richard Murray accused the collapsed Dick Smith chain of pushing an “unsustainable” retail model that included selling PlayStation 4 consoles through eBay at prices that “torched the market” for everyone else and “aggressive” discounting on Apple products that failed to win the long-term loyalty of customers.

Merola also implemented a failed house brand strategy.

This was the work of Merola who weeks out from the collapse of Dick Smith openly lied to ChannelNews about the profitability and the performance of Dick Smith.

Back on August the 18th Merola told me at the opening of their first Connected Home appliance store, that Dick Smith was “tracking nicely” he said that the Company was not facing revenue and profit problems when I put it to him that the Company was struggling.

“where do you get all this bullshit from.” he said.

Nick Aboud who was with Merola at the time said that the Company which floated on the stock market in 2013, had recorded standout sales spanning
entertainment and computers, and that they had become a market leader in wearable fitness products.

When questioned about the company’s private label strategy Merola said that Dick Smith’s private label products had sold well, accounting for over 12.5 per cent of total sales. He said that The Company planned to increase its private label range by 40 per cent.

In reality the business was struggling from poor sales, a lack of capital and plunging profits.

8 weeks later shares in Dick Smith plunged 30% after the Company cut its full-year profit guidance by around 15%.

CEO Nick Aboud also admitted at that announcement that gross margins had been squeezed, and that Dick Smith expected 2016 net profit to be $5 million to $8 million below its previous guidance of $45 million to $48 million and consensus forecasts around $45.3 million.

By this stage Merola’s strategies were going up in flames and his marketing was proving to be ineffective.

Merola took over Director of Strategy at Dick Smith Holdings Limited in May 2015. By this stage executive were starting to quit the sinking Company.

Merola told me in November 2015 that Rod Orrock the former General Manager had not quite the Company because of a fall out with management or because he was not happy with the buying process or the direction of the Company.

He said at the time that Orrock was “seriously ill” and had left the Company because of his illness and the need for “constant medical treatment”.

Months later Orrock popped up as the new CEO of Best + Less.

Merola was also at one stage Director of Buying at Dick Smith. He dealt directly with the companies Hong Kong buying office which was described as a disaster by several senior executives of the Company.

“Merola approved the buying of stock from Hong Kong that would never sell. This was borne out by the volume of merchandise that the liquidators were left to shift” said one former buyer.

Described as a “Yes man” to Nick Aboud former senior executives have told me that Neil Merola has a lot to answer for in the collapse of Dick Smith.

Now Merola is still describing himself as being a “skilled” retailer who after 20 years with Myer of which part was working as the General Manager Electronics Buying, Regional Sales Manager and Store Manager at Myer he still has what it takes to deliver strategic and business development advice.

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