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Dick Smith 'The House Of Brands' Cashed Up No Debt & Spoiling For A Fight

By David Richards | Thursday | 01/08/2013

Dick Smith is the "new house" of technology brands, they are cashed up, have no debt and are spoiling for a fight.

A few weeks ago management from the biggest brands in the consumer electronics and IT industry were bought together by Dick Smith management for a briefing. Within hours of that meeting breaking up the buzz around the Industry was that Dick Smith was in play and a real threat to several retailers

They have a "vision", a "plan" and a "Hugh opportunity ahead" were just some of the comments fed back to me. "At last someone who knows how to grow a business" said one high placed Samsung executive.

Yesterday Nick Abboud the new CEO of Dick Smith and the man who some say "stole" Dick Smith from Woolworths for a mere $20M upfront payment showcased the first of several new Dick Smith stores that are set to be opened in Westfield shopping centres. 

Located under Myers in the City and right next to a food hall that attracts 2 million people a week the new store is packed with high profile technology brands and hundreds of products spanning computing, accessories and mobility, it is just one of 400 stores that Dick Smith will operate by the end of the year. 

Currently the Dick Smith chain has 323 stores, including 67 in New Zealand, and all are profitable. 

Click to enlarge

The group swooped on the Dick Smith brand in September 2012, when Woolworths sold the chain for the same price it had paid founder Dick Smith for it years earlier.

Aboud said that he will open a similar 600 sq. m. store in Melbourne's Chadstone shopping complex in three weeks, and others will follow in Westfield Southland in Cheltenham and the Emporium upmarket centre on the former Bourke St Myer site.

The new stores feature Samsung and Apple store-within-a-store operations, staffed by trained operators from the rival companies. Total turnover is put at $1.3 billion, and the company claims it has no core debt.

"We're going for 'A' locations in high-traffic locations," he said over the champagne and upmarket nibbles, defending the choice of the new Sydney store's location beside the Westfield food hall.

Aboud who is seen as a savvy retail believes that JB Hi Fi and Dick Smith while selling the same products have different audiences. 
"We have conducted extensive research since buying the business and we believe that we have not only a different audience to JB Hi Fi but an older audience".

When asked whether he would strip business away from Harvey Norman, The Good Guys and Officeworks over JB Hi Fi he said "Yes".
Last week Anchorage Capital the owners of Dick Smith paid Woolworths $74 million from cash reserves. It was a final payout figure that gives them 100% control of the retail chain.

The money was paid instead of a percentage of profits if the business was later sold.

15% of the business will be two house brands Abboud said. They will marketed as Tandy and Dick Smith.

The Company is also rolling out a new online platform (See separate story) that will take on parallel importers. Currently online makes up 4% of Dick Smith revenue.

Abboud forecast Dick Smith's online business would eventually be responsible for 10 percent of sales.

He also believes that the Company is in a ''powerful position'' given it had no core debt and that all their stores were profitable a situation that has satisfied several debt insurance underwriters who at one stage were concerned after Woolworths sold the business to Anchorage Capital.

''Anchorage (Capital) are very confident with the strategy that management have put into the business. It allows us to look at many options - and one of those would be an IPO,'' he said. ''The timing of that - obviously we need to perform for a period of time. Once we get some runs on the board then we will allow a wider market to get involved.''

Abboud who took up his role at Dick Smith after a 19-year stint with Myer, told ChannelNews that the three core pillars of their business going forward were mobile, accessories and computing. He said that gaming was also set to be a key part of their business after the Company recently fired a senior buyer from EB Games.

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