Dick Smith kicks off ‘suicidal’ sale

DICK Smith has kicked off its “mammoth” fire sale offering discounts of up to 80 per cent off unwanted stock.

ELECTRONICS retailer Dick Smith has kicked off its “mammoth clearance” fire sale offering discounts of up to 80 per cent off unwanted stock in what rival retailer Gerry Harvey earlier this week described as a “suicidal” move.

Announcing the sale on Facebook this morning, Dick Smith is offering discounts of up to 60 per cent smartphones, tablets, fitness, toys, GPS and printers, and up to 70 per cent on TVs, Blu-ray players and audio equipment.

The move by troubled retailer, which saw its share price plummet by 70 per cent this week after chief executive Nick Abboud revealed it was writing down the value of its inventory by $60 million, has sparked fears of a price war with JB Hi-Fi and Harvey Norman.

Harvey Norman founder Gerry Harvey told The Australian on Wednesday that a fire-sale in the lead-up to Christmas would be “suicidal”. “That will only make it so much worse for them,” he said.

“They are not making any money if they sell everything in a fire sale. They will lose a lot of money. Why would they do that — that’s committing suicide.’’

Customers on Facebook reported being unable to find discounted items within hours of the sale announcement. “Stores cannot hold stock,” the company said in response to one complaint.

“But they will honour all sales if they have stock available.”

Others have pointed out some slightly uninspiring deals:

Hey @DickSmith: This isn't much of a saving pic.twitter.com/hjyL1nPZtF

— Disco Stu (@Disco_Ess) December 3, 2015

Seriously Dick Smith? His and her's gifts? Since when is a kettle and a toaster a gift for her? @EverydaySexism pic.twitter.com/EhWAejeMMg

— Catherine Deveny (@CatherineDeveny) December 4, 2015

At midday, shares in Dick Smith had fallen a further 5 per cent to 38 cents after it was announced the retailer would drop out of the list Australia’s top 200 companies in the ASX 200 index’s quarterly reshuffle.

The retailer listed on the share market for $2.20 a share two years ago, raising $345 million after private equity firm Anchorage bought it from Woolworths for $20 million in 2012.

IG Markets analyst Angus Nicholson described the sale as an “act of desperation”. “Once you’re doing 70 per cent markdowns you’re making a loss, nowhere near breaking even at all, you’re just trying to get it out the door,” he said.

Mr Nicholson said the Christmas period was usually when one third of annual revenue was made. “It’s going to be really damaging to other stocks in the sector and going to hurt next year [in their profits].”

He pointed to the relative success of JB Hi-Fi until now and better-than-expected retail sales and consumer confidence figures as indicators Dick Smith’s woes were largely due to “management faults”.

“It’s a disaster for [JB Hi-Fi and Harvey Norman] who are suffering from Dick Smith’s mismanagement,” he said.

Earlier this week, a top executive at Big W jumped ship from the troubled Woolworths discount retailer to join Dick Smith as director of retail operations.

Big W head of trade and family entertainment Algy Pereira was rumoured to be a candidate to replace Mr Abboud, but in a statement the company said there were no plans to replace the CEO.

“He is a great senior hire who brings fantastic experience and capabilities to the business. We are excited about the impact his appointment will have,” the statement said.

Australian retail spending rose 0.5 per cent in October, official figures show, beating economists’ expectations. The October figure was boosted by a 3.5 per cent rise in department store sales, and the household goods category was also strong, with a 1.1 per cent rise.

Total retail spending was $24.65 billion in October, up from $24.5 billion in September, the Australian Bureau of Statistics said on Friday.

— with AAP