Uncertain times for Dick Smith stores in Toowoomba
STAFF at Toowoomba's two Dick Smith stores will face a period of uncertainty after the electronic retailer was placed in receivership following the appointment of voluntary administrators.
There are two Dick Smith stores in the Garden City, at Grand Central and Clifford Gardens Shopping Centre.
On Monday the company requested its shares be placed in a trading halt.
Today Ferrier Hodgson partners James Stewart, Jim Sarantinos and Ryan Eagle were appointed receivers and managers over Dick Smith Holdings Ltd.
Receiver Mr Stewart said the voluntary administration meant Toowoomba residents would not be able to use valid gift vouchers and deposits could not be refunded.
Affected customers will become unsecured creditors of the group.
Mr Stewart said employees of the Grand Central and Clifford Garden stores would continue to be paid by receivers.
If anything was to happen to the stores, the employees are covered under the Fair Entitlements Guarantee (FEG) scheme.
"Dick Smith is one of the best known brands associated with consumer electronics in Australia and New Zealand," Mr Stewart said.
"We are immediately calling for expressions of interest for a sale of the business as a going concern."
Rumours had been circulating for a while that Dick Smith was losing to retail giants like Harvey Norman and JB Hi-Fi.
But Mr Stewart said it was too early to identify the causes of the company's financial decline other than the business had become "cash constrained".
He said it was "business as usual" while the receivers looked at restructuring and finding opportunities for the group.
Dick Smith Holdings Ltd runs 393 stores across Australia and New Zealand.
Mr Stewart expects the profitable New Zealand business to attract buyers.
Profit downgrades in October and November meant the troubled company's share price dropped 83per cent over 2015.
In the 30 days to Christmas, Dick Smith held a fire sale, which included heavy discounting.
The retailer slashed the value of its inventories in November 2015 by $60 million, around 20 per cent.
Shares in the company last traded on December 31 at 35.5 cents.
The Dick Smith website is expected to be regularly updated throughout the receivership.