Dick Smith lashes out as 100 stores face closure, sell-off looms

Australian entrepreneur Dick Smith has lashed out at Woolworths’ plan to sell the chain that bears his name and shut around a quarter of the chain's stores.

There are currently 386 Dick Smith outlets across Australia and New Zealand.

Woolworths will close about 100 under performing stores as the consumer electronics chain is prepared for possible sale.

The retail conglomerate reported its first earnings decline in 13 years yesterday.

The company said it would take a $A300 million charge on costs associated with getting out of Dick Smith leases, writing down the chain’s assets and redundancies.

The retail conglomerate said its Dick Smith business was still profitable – it made $A22 million last year - but would perform better under a new owner. It planned to focus on liquor and food, and competing with supermarket rival Coles.

Founder Dick Smith – who sold his majority stake in the chain to Woolworths in 1982 for $A20 million – said he would “rubbish” the chain if it was sold to a foreign buyer.

The “Buy Australia” campaigner said Woolworths' decision was a sign Australia was moving closer to the point when everything will be foreign owned.

Dick Smith recently rebranded and refurbished stores, in part to counter-attack fast-expanding JB Hi-Fi (whose shares surged yesterday. JB recently took the innovative step of announcing a music download store - though has not returned NBR queries about whether it will extend to this side of the Tasman).

But as it has swished up in a bid to match JB in consumer electronics, Dick Smith has also lost some of its traditional customers. On Twitter, several told NBR they now preferred the Jaycar chain, which sells more components and appeals to the hardcore geeks who used to form Dick Smith’s base.

The Dick Smith chain has a book value of around $A400 million. It is expected to fetch between $A175 million and $A190 million in a trade sale, assuming a multiple of eight times earnings.

On Twitter, one internet wag asked if Woolworths would attempt to talk the buyer into an extended warranty – a reference to a Dick Smith up-sell tactic that has annoyed many customers.