Dick Smith customers left out of pocket on undelivered goods, lost deposits and gift cards

DICK Smith has slammed the previous owner of the troubled electronics store, saying it should guarantee the money customers are owed.

DICK Smith has issued a spray at the private equity firm that floated the electronics store he founded, which is now in voluntary administration.

The outspoken entrepreneur said the previous owner, Anchorage Capital Partners, had “a lot of explaining to do” over its $520 million IPO, which he argued was drastically overvalued.

And he called on those who benefited to step up and guarantee customers the money they are owed for deposits, gift cards and undelivered goods.

“They most certainly should be refunded,” Mr Smith told news.com.au. “Some of the people who made a fortune out of the recent float, they should pay back those people who’ve put down deposits.

“The company could not possibly afford to be that indebted, or have that value on the market.”

Anchorage bought Dick Smith Electronics from Woolworths for $94 million in 2012, then floated it for $520 million just 15 months later.

With the troubled retailer now in administration, customers left out of pocket by Dick Smith’s meltdown have been lumped together with all its other unsecured creditors.

This means they are unlikely to recoup the full amount of what’s owed to them.

Dick Smith’s bankers have appointed Ferrier Hodgson as receiver, which plans to put the business on the market.

In a blow to customers, Ferrier Hodgson this morning released a statement confirming that it would not honour outstanding gift vouchers or refund deposits paid for goods.

But the firm said it would continue to pay Dick Smith’s 3300 employees and keep the chain’s 393 stores running during the restructure.

Mr Smith — who founded the business with just $610 — has not been involved in the running of Dick Smith since he sold it to Woolworths in 1982, but remains emotionally invested in his retail namesake.

“I am proud it’s gone for 47 years and employed thousands of Australians,” he told news.com.au. “And over the years the mum and dad share holders of Woolworths have done incredibly well out of Dick Smith Electronics.”

While stores remain open for business, the company’s future is under a dark cloud.

Its board has appointed McGrathNicol as voluntary administrator, having failed to secure bank funding to see the business through the next four to six weeks.

Cash raised through pre- and post-Christmas sales — described by some commentators as “suicidal” — was insufficient to restock Dick Smith’s shelves, a frightening prospect for those with outstanding orders.

Many are seeking refunds and disputing transactions with their banks and PayPal.

Melbourne’s Mái Medina thought she was onto a bargain when she bought an LG 49-inch smart television with a 30 per cent discount from the Dick Smith website on Boxing Day.

But when it had failed to show up more than a week later, she got worried.

Not such a hot deal after all ... Mái Medina’s television, still advertised on Facebook, failed to show up.

Ms Medina is among several disgruntled customers to have complained on the retailer’s Facebook page about missing items.

“If you have paid for the product get to where it is and pick it up today, quick,” fellow Facebook user Adrian Stewart advised.

“I just called and I cannot pick it up ... they said I cannot do it ... probably because it is out of stock,” Ms Medina replied. “So I cancelled my order.”

Ms Medina told news.com.au that Dick Smith was yet to refund her $699, and was this morning told by customer service that it would take five days to process.

“I’ve been chasing it up since last week, but it’s just a mess,” she said.

She said Dick Smith had blamed its courier for the mishap, but she suspected the retailer may have simply run out of stock.

Meanwhile, Facebook adverts for the television are still appearing in newsfeeds, according to Melbourne man Stephen Mogg.

“I keep seeing this ad in my Facebook feed advertising this television for $699, when your website shows it for $999,” Mr Mogg wrote on Dick Smith’s Facebook page. “Plus it is out of stock.”

According to consumer group Choice, although customers seeking refunds would not be a high priority among Dick Smith’s creditors, they did have some rights.

An explainer on the Choice website advises those who paid using a credit or debit card to contact their banks and seek a chargeback.

“On behalf of the customer, the card issuer will seek a refund from the bank of the folded company,” Choice said.

“Time limits for chargeback apply and may vary between financial institutions, so it’s important to contact your bank or credit union as soon as possible.”

Those who paid with cash or Eftpos will have to register as creditors with the voluntary administrator, and hope for the best.

Dick Smith’s retail namesake is a shadow of its former glory. Picture: Dylan Robinson

Dick Smith’s demise prompted a number of Facebook users to unleash about the retailer’s disappointing customer service in recent months.

“So I’m guessing selling your $1 phone covers wasn’t enough to keep the company afloat. Do I feel sorry for the staff at my store, hell no ... Worst customer service ever. Goodbye and good riddance,” one person wrote.

But another customer said he hoped the retailer’s founder, Dick Smith himself, would buy back the company and “turn things around into the shop we all knew and loved”.

News.com.au put this to Mr Smith, who responded: “There’s no chance of that.”

He said he still hoped the retailer could be saved, for the sake of staff, along with shoppers who wanted to buy from an Australian-owned company.

Dick Smith’s social media manager left customer queries unanswered on the page, yet found the time to post about a Twenty20 cricket promotion yesterday, and earlier asked followers what their New Year’s Resolutions were.

“Yes, to never shop at Dick Smith again!” one Facebook user replied.

Dick Smith chairman Rob Murray said in a statement this morning: “Whilst confident on the long-term viability of the company, the directors have been unsuccessful in obtaining the necessary support of its banking syndicate to see it through this period.”

Mr Murray blamed the company’s financial woes on worse-than-expected sales and cash generation in December, continuing the weak trend from previous months.

Dick Smith had explored alternative funding, but concluded this would not be secured in time to order the required inventory during the next four to six weeks, he said.

The announcement comes a day after Dick Smith shares were put in a trading halt, a move that revived investor fears about the company whose share price has tumbled 84 per cent since last May. The shares have now been suspended from trading.

The retailer first warned in October that full-year profit could fall as much as 15 per cent to between $37 million and $43 million, as it stepped up discounting and advertising to restore sales growth.

But the sales slump continued into November, resulting in the company having to dump its profit forecast a few weeks later.

The retailer was forced to launch a fire sale in early December to clear unwanted stock that cost it about $60 million in writedowns.

Shares in the company have been battered in recent months, wiping out hundreds of millions in market value.

Dick Smith shares closed at 35.5 cents on the last trading day in 2015.

Retail giant Woolworths received $94 million after selling Dick Smith Holdings to private equity firm Anchorage Capital Partners in 2012.

A year later, Anchorage floated the company on the Australian share market at $2.20 a share, valuing it at $520 million.

— with AAP

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