Dick Smith says Ruslan Kogan can repair damage to the brand

DICK Smith says he’s “very happy” his old company has been rescued by Ruslan Kogan and believes the brand’s damage can be repaired.

AUSSIE entrepreneur Dick Smith says he’s “very happy” his namesake electronics store has been rescued by Ruslan Kogan and is confident the damage done to the brand will not be permanent.

The Belarusian-born online electronics pioneer announced this morning he had bought the Dick Smith brand and online operations from receivers Ferrier Hodgson for an undisclosed sum.

Kogan, who made his fortune selling cut-price private label electronics 10 years ago, intends to continue running the Dick Smith store as a stand-alone operation but will leverage his expanded bargaining position to negotiate better terms with suppliers.

Speaking to news.com.au, Mr Smith, who founded the electronics chain before selling it to Woolworths in 1982, said he had spoken to Mr Kogan yesterday and gave him his blessing.

“I’m very happy. I don’t know him but I understand he’s very ethical and I think his formula is good,” he said. Mr Smith said he believed Kogan could repair the damage to the brand.

“I’m hoping he can turn what I consider to be a very short period of total lack of ethics with Anchorage [Capital Partners] back into ethical business again. I don’t think it will take very long at all.”

Mr Smith has publicly blamed the private equity firm for the collapse of the company. Anchorage bought Dick Smith from Woolworths for $20 million in 2012 and floated it on the stock market for $520 million 18 months later.

“It’s just common sense. If something is worth $90 million one moment, it cannot be worth $500 million 18 months later when there’s been no change,” he said.

E-commerce pioneer Ruslan Kogan, centre, is the “way of the future”.

“There have been people stopping me in the street to say, ‘Isn’t it terrible what Anchorage did to the company?’ It has been called the greatest private equity heist of all time and I would agree with that.

“I believe Dick Smith would have still been in business if they hadn’t in effect milked $400 million out of it.”

But Anchorage managing director Phillip Cave spoke out earlier this month, telling The Daily Telegraph that the firm had made “a significant investment in staff, stores, marketing and the operating systems” before floating the company.

Mr Smith said Kogan’s online-only model and focus on private-label products was the “way of the future”, and in many ways was going back to the brand’s roots.

“Before we had the 50 shops, that’s where I made a lot of the initial money,” he said. “We were very big in mail order and made a fortune.

“My prediction is that the prices of consumer electronics will keep coming down, and I don’t know how the bricks-and-mortar shops will be able to make enough money to cover the overheads.

“I think his formula is the one for the future. As long as he sticks to being 100 per cent honest and ethical he’ll do very well.”

But Harvey Norman shouldn’t be worried just yet, he added. “I think Gerry Harvey is the best retailer in the world without a doubt,” he said.

“While Gerry is alive it will be hard for anyone to compete with him. That’s why I think Ruslan Kogan’s idea is really brilliant — don’t get out and compete with Gerry Harvey but compete in low-overhead, web-based sales.”

Receivers for the Dick Smith chain failed to find a buyer for its bricks-and-mortar stores, the closure of which is expected to result in nearly 3000 job losses.

While some customers welcomed the news, others pointed out the jobs were still going. “Going online. Rescued everything but the staff. Congrats,” Steve Dunkley wrote on news.com.au’s Facebook page.

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