Dick Smith IPO - DSE

[winner69]

Dick Smith coming back to the market before Xmas

Instos want a decent discount in case Xmas sales don't meet expectations.

Seems to have turned around since WOW get rid of their dog .....but a good deal for the purchasers

http://www.smh.com.au/business/markets/from-20m-to-344m-dick-smith-for-sale-20131114-2xizx.html

I can't contemplate joinig in ......being a fan of JBH

[winner69]

At least Anchorage keeping a decent chunk for now and management getting a decent chunk to keep their minds on the job

http://www.smh.com.au/business/woolies-faces-grilling-over-dick-smith-20131114-2xjkq.html

[percy]

Scares me.!!!!!!!!!

[Stranger_Danger]

You would have to be on crack to buy this stock.

Has been a classic private equity play - just look at the stores, empty shelves, stock levels reduced to an unsustainably low level. Got out of several categories in the stores I've visited, eg, DVD's, which is fine. But replaced with? Nothing?

Seem to be specialising in home brand stuff which I hear carries incredible margins, but how? And at what cost to the long term reputation?

Staff levels reduced, and knowledge lower than ever.

I just don't see where Dick Smiths fits in the market any more.

The PE guys have done a fantastic job dressing up this dog, and next to Freelancer.com, if they can sell it as "conservative tech", in this market, people may just buy it for "safety".

Just another tick in the box as to why I'm *slowly* (key word) reducing my exposure to equities.

[winner69]

Must be expecting a bit of a market crash after Xmas ....seeing the rush to get rid of this

[Entrep]

DSE seems to be discounting themselves to oblivion.

[macduffy]

I just don't see where Dick Smiths fits in the market any more.


That's the problem as I see it too.

Sort of the "Postie Plus" equivalent in electronics retailing?

[steve fleming]

Almost all the Dick Smith senior management have come across from Myer, and were involved in the Myer IPO....wonder if they have learnt some lessons from that IPO?

[percy]

To be successful in this field you need to be part of huge buying group,like JBHiFI and SCY [nz] are.DS are not in it.
To be successful in this field you need muscle to get lower rent for your stores.They have no muscle,so will pay high rents.

[Stranger_Danger]

Almost all the Dick Smith senior management have come across from Myer, and were involved in the Myer IPO....wonder if they have learnt some lessons from that IPO?

They've learned a whole heap.

This one will make them even more money, and lose shareholders even more money.

[born2invest]

There is a reason Woolworths sold this several years ago for next to nothing.

I work next door to their Auckland Dick Smith Distribution Centre and their container yard and racking looks completely empty.

[winner69]

Well the first week wasn't the disaster some thought .....week close above ipo

The promoters are happy ....they got their zillions before xmas

[winner69]

There is a reason Woolworths sold this several years ago for next to nothing.

I work next door to their Auckland Dick Smith Distribution Centre and their container yard and racking looks completely empty.

Maybe good stock control .......no excess inventory sitting in warehouses some times a good story

[soulman]

Just another tick in the box as to why I'm *slowly* (key word) reducing my exposure to equities.

That was the top of the market. Good call SD. Quickly reducing exposure would be a saviour for everyone.

DSH will be skiing down slope in the next few months in my view.

[soulman]

Down 10% from IPO price, closing at $1.99. Another MYR in the making.

[percy]

They've learned a whole heap.

This one will make them even more money, and lose shareholders even more money.

Spot on.!!!!

[ratkin]

Im in today. Time will tell if its a wise move, but certainly much cheaper than a few months ago

[Stranger_Danger]

Really? On a 5 year time frame, this one could easily go to zero.

[winner69]

Oh dear -- margins stuffed by the sounds of it

What a reaction - down 30% odd to 84 cents

PE less than 5 on guidance figures

Market obviously expecting more bad news

Looking closely to see what happens tomorrow morning to see if the sustained selling continues. I feel an opportunity coming

[percy]

Really? On a 5 year time frame, this one could easily go to zero.

Moved strongly in that direction today.

[RRR]

https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/

Well worth a read as to how PE sold to investors after selling all the inventory! Well spotted Stranger Danger!

[whirly]

Jeepers what a rort. Recommended reading for sure.

[Baa_Baa]

Incredible story a must read "turning mutton into lamb".

Disc: don't hold, certainly won't now!

[winner69]

That rort in the past

Was 66 cents today the low?

Not broke yet - still selling stuff and making a buck

[Stranger_Danger]

That rort in the past

Was 66 cents today the low?

Not broke yet - still selling stuff and making a buck

Still nowhere near a buy.

The problem is, they are in what would be a really tough sector for a well run, much loved, efficient operator.

They are anything but. You might be able to trade a bounce, but my valuation is 15-20 cents.

The only thing this thread makes me want to invest in is Anchorage Capital!

[Plutus]

Not the first time for Anchorage. They did rather well out of selling Burger King NZ to Blackstone back in 2011. In hindsight a dumb deal for Blackstone as BKNZ is still reporting losses and must be coming under bank pressure. Agree with you SD, invest in Anchorage.

[trader_jackson]

I know DSE (in NZ) has struggled to compete against new, 'fast moving', 'dynamic' retailers like PB Technologies (who have rapidly expanded in the 20 or so years they have been around), who also have an extensive service network (over 25% of PB's staff are in servicing).

Noel Leaming here in NZ has also been struggling.

Computer retail industry: it is extremely tough... I would say Harvey Norman is an exception, mainly because they are a '1 stop shop' for several things, not just computer/audio equipment etc, and still have an amazing brand name built up over the years... far more so than any other brand names in NZ, they also have extensive interest deals which may appeal to some consumers.

(I imagine my comments for NZ are similar to Australia... therefore any computer retailer that doesn't have a huge, huge brand behind them, run for the high hills while you still can)

Just my 2 cents on computer retailing (Disclosure: I worked as a computer salesman for almost 2 years and have only recently quit at one of the companies mentioned above)

[percy]

Went into Harvey Norman to buy the granddaughter an Apple computer on Sunday.They had the one she wanted on display,but none in stock.Tried to sell me one $600 dearer than the one she wanted.When we asked to buy the one on display, they tried to sell it to us for $300 more than the price ticket that was on the lid.When we finally came to an agreement on price, the salesman then tried to load us up with an overprice extended warranty which I declined, only to be offered a $199 security program.As the computer had been a display model their technician had to reprogram it.This morning he rang and advised he could not reprogram it, and I was offered a refund,which I accepted.
After school today I took my granddaughter to Dick Smiths in Westfield Riccarton.We were quickly approached, and told the salesman we were after modelX Apple computer.Yes ,you have come in for the 10% discount he said smiling,I will just grab you one.We were offerd the extended warranty,but declined,but took the $39.99 security option.
Conculsion.Dick Smith were friendly,helpfull and a pleasure to do business with,while Harvey Norman were not.

[Stranger_Danger]

I doubt DSH made much, if anything. The margins on Apple are a joke - hardly worth selling it.

[winner69]

Jeez- another disaster day for DSH

Least it's recovered from 20 cents

Plenty to be made or lost for the brave

[winner69]

This really is a case of management saying 'we have no idea'

ASX Announcement
Non-cash adjustment following inventory review

Following the trading update at the Company’s Annual General Meeting on 28 October 2015, management initiated a review of inventory. The review, which is being conducted with the assistance of external consultants, remains in progress.
The objectives of this review include:

 achieving category right sizing;
 optimising the depth and breadth of inventory;
 identifying the anticipated impact of achieving preferred weeks cover and the level of marketing
support required to achieve these objectives, and;
 driving customer-centric outcomes.

Whilst this review was prompted by the disappointing October performance, November trading was below expectations and stock holdings remain above management’s preferred levels.

Significant marketing activity continues in an effort to stimulate consumer demand during the all-important Christmas trading period. The benefits of this activity on inventory levels are, at this time, uncertain.

“We remain cautious on the outlook for the Christmas trading period,” said Dick Smith Managing Director and CEO, Nick Abboud. “We will continue to drive sales, maintaining flexibility on gross margin to reduce inventory and improve our net debt position.”

While the inventory review has not concluded, the Board has determined that a non-cash impairment of $60 million (pre-tax) is required. Further impairment may be required, depending on Christmas trading.

Given the non-cash write-down and the uncertain trading outlook, the Company is unable to re-affirm the profit guidance previously provided.

A further update will be provided in February 2016, when the half year results are released, or earlier if required.

[Buffett Jr]

This really is a case of management saying 'we have no idea'

ASX Announcement
Non-cash adjustment following inventory review

Following the trading update at the Company’s Annual General Meeting on 28 October 2015, management initiated a review of inventory. The review, which is being conducted with the assistance of external consultants, remains in progress.
The objectives of this review include:

 achieving category right sizing;
 optimising the depth and breadth of inventory;
 identifying the anticipated impact of achieving preferred weeks cover and the level of marketing
support required to achieve these objectives, and;
 driving customer-centric outcomes.

Whilst this review was prompted by the disappointing October performance, November trading was below expectations and stock holdings remain above management’s preferred levels.

Significant marketing activity continues in an effort to stimulate consumer demand during the all-important Christmas trading period. The benefits of this activity on inventory levels are, at this time, uncertain.

“We remain cautious on the outlook for the Christmas trading period,” said Dick Smith Managing Director and CEO, Nick Abboud. “We will continue to drive sales, maintaining flexibility on gross margin to reduce inventory and improve our net debt position.”

While the inventory review has not concluded, the Board has determined that a non-cash impairment of $60 million (pre-tax) is required. Further impairment may be required, depending on Christmas trading.

Given the non-cash write-down and the uncertain trading outlook, the Company is unable to re-affirm the profit guidance previously provided.

A further update will be provided in February 2016, when the half year results are released, or earlier if required.

I don't follow Dick Smith, but always enjoy learning new things. So I've looked up impairment charges and from what I can see in this link...

http://www.investopedia.com/articles/analyst/110502.asp?layout=infini&v=1A

Most impairment charges are write downs of good will. However, because Dick Smith is saying a $60million impairment of inventory, this seems to be different.

If I understand it correctly, they are doing a stock take in their stores, DC's, containers, etc and they are saying that they have just somehow lost $60million worth of stock?

Can someone please explain as this is an investment lesson I'm failing to fully understand.

Thanks,
Elliot.

[winner69]

I don't follow Dick Smith, but always enjoy learning new things. So I've looked up impairment charges and from what I can see in this link...

http://www.investopedia.com/articles/analyst/110502.asp?layout=infini&v=1A

Most impairment charges are write downs of good will. However, because Dick Smith is saying a $60million impairment of inventory, this seems to be different.

If I understand it correctly, they are doing a stock take in their stores, DC's, containers, etc and they are saying that they have just somehow lost $60million worth of stock?

Can someone please explain as this is an investment lesson I'm failing to fully understand.

Thanks,
Elliot.

Probably not all lost/missing or anything

Probably means they have a lot of obsolete and slow moving stock and stock people don't want to buy. Not good in the electronics market eh .... who wants an old model iPhone or whatever

They then mark it down to a realistic value or write it off completely - an impairment in other words.

They say non-cash so wont affect this years cash flow. Affected previous years when they paid for the stock though. Will reduce profits but will be called non-recurring so wont be included in 'normalised profit' but of course the company is $60m poorer
The worrying thing about the announcement is more about not selling as much as they want ... and what they do sell is at cheaper prices than they want.

A disaster unfolding methinks

(did you read that blogpost somebody posted about this being a Private Equity heist of gigantic proportions)

[Buffett Jr]

Probably not all lost/missing or anything

Probably means they have a lot of obsolete and slow moving stock and stock people don't want to buy. Not good in the electronics market eh .... who wants an old model iPhone or whatever

They then mark it down to a realistic value or write it off completely - an impairment in other words.

(did you read that blogpost somebody posted about this being a Private Equity heist of gigantic proportions)

Perfect, thanks yes that explains it incredibly well, appreciate it. As soon as the new model comes out, people are only willing to pay less for the older model. Very logical.

Yes, very interesting article!

[Stranger_Danger]

I remember a while back, after Anchorage bought in, the local Dick Smiths were selling DVD's for $1 and $2 each.

I looked through all the bins and bought only a few. Most of them were just awful crap, and they had dozens of copies of some of them.

In the age of illegal downloading, what is a physical copy of a movie nobody wants to see really worth? Less than a blank one?

There have clearly been bad inventory decisions made, and when I see all the Windows 7 computers, I wonder how much has really changed.

The inventory writedown is very real - they held and still hold plenty of the wrong stuff. You'd need a good salesman to someone flick it, but when I just walked through my local, I saw 4-5 chubby males aged 20-40, with not a single bit of get and go between them.

I retain my 20 cents valuation and am starting to wonder if I was too optimistic.....

[h2so4]

The current market cap is very low. Somewhere around current equity after taking off lost inventory.
I know they have low margins but they are still cashflow positive.
Observing Dick Smith today at Robina customers in store and they weren't bin lookers. There is a different vibe in D S than JB but there is a business here as customers ask dumb questions and staff make sales.

[winner69]

The current market cap is very low. Somewhere around current equity after taking off lost inventory.
I know they have low margins but they are still cashflow positive.
Observing Dick Smith today at Robina customers in store and they weren't bin lookers. There is a different vibe in D S than JB but there is a business here as customers ask dumb questions and staff make sales.

Cashflow positive?

Last 2 half years cashflow a have been +&7m and -$46m respectively .....and there was a significant increase in creditors (bills not paid)

Current desperate measures would say cash flow negative since last balance date

Hmmmm

70% off everything they say - wonder what stock will move first if that is the case

[percy]

The current market cap is very low. Somewhere around current equity after taking off lost inventory.
I know they have low margins but they are still cashflow positive.
Observing Dick Smith today at Robina customers in store and they weren't bin lookers. There is a different vibe in D S than JB but there is a business here as customers ask dumb questions and staff make sales.

Not being part of a large buying group DSH operate on lower margins.
Margin is already low in this sector.
Giving away margin comes off the bottom line.
DSH have huge liabilities with leases,staff entitlements etc.These are on going and must come out of margin/profit.cashflow.
They operate in very high rent locations.
Just be aware customers are usually more savvy than retailers.
Getting stock selection wrong means your chances of staying in business are slim.
Buying a computer at $1,200 and selling it at $1,000 is the recipe for disaster.Buying it for $1,500 and selling it for $750 just means a bigger disaster.That is the real affect of stock right downs.
Shareholders are at the bottom of the list,landlords,staff, banks,suppliers,tax man etc come before shareholders.
Buy their products,not their shares.!!

[h2so4]

Yes a timely reminder.
I thought there might be a dollar in it but common cents will prevail.
Cheers Percy.

[percy]

Yes a timely reminder.
I thought there might be a dollar in it but common cents will prevail.
Cheers Percy.

Sorry to have gone on,but being an ex retailer I know just quickly things can go wrong.

[trader_jackson]

I know DSE (in NZ) has struggled to compete against new, 'fast moving', 'dynamic' retailers like PB Technologies (who have rapidly expanded in the 20 or so years they have been around), who also have an extensive service network (over 25% of PB's staff are in servicing).

Noel Leaming here in NZ has also been struggling.

Computer retail industry: it is extremely tough... I would say Harvey Norman is an exception, mainly because they are a '1 stop shop' for several things, not just computer/audio equipment etc, and still have an amazing brand name built up over the years... far more so than any other brand names in NZ, they also have extensive interest deals which may appeal to some consumers.

(I imagine my comments for NZ are similar to Australia... therefore any computer retailer that doesn't have a huge, huge brand behind them, run for the high hills while you still can)

Just my 2 cents on computer retailing (Disclosure: I worked as a computer salesman for almost 2 years and have only recently quit at one of the companies mentioned above)

Said this just over a month ago... looks like DSE really is struggling in this tough retailing industry!

[trader_jackson]

Stay away from DSE guys, both as investors and shoppers... That's all I'm going to say

[showstring]

latest announcement pretty much means RIP DSH

[winner69]

Receivership / voluntary administration according to The Australian

Shares worthless?

But a reincarnation of sorts will no doubt list again.

[trackers]

Private equity...Classic. Bought for 100mil in 2011, sold for 500mil to general public in 2013... two years later, worthless

[airedale]

Private equity...Classic. Bought for 100mil in 2011, sold for 500mil to general public in 2013... two years later, worthless

Good comment Trackers, there have been too many others. Feltex etc.

[fungus pudding]

Going .....going ,,,,,gone!

[Joshuatree]

Lucky i got those cheap batteries on boxing day:sleep:.Always seemed to be plenty of customers in the local shop( esp compared with Hallensteins) but if the margins weren't there.... Good chance receivers will keep them trading for awhile at least?

[fungus pudding]

Lucky i got those cheap batteries on boxing day:sleep:.Always seemed to be plenty of customers in the local shop( esp compared with Hallensteins) but if the margins weren't there.... Good chance receivers will keep them trading for awhile at least?

Probably drop poor performing outlets and keep the goodies. Not much choice really.

[Stranger_Danger]

Well my valuation of 20 cents per share was too high. I really am an incurable optimist!

[trackers]

Good comment Trackers, there have been too many others. Feltex etc.

Reminded me of Feltex straight away as well!

[percy]

Well my valuation of 20 cents per share was too high. I really am an incurable optimist!

With 393 stores it is going to take more than an "incurable optimist" to sort out the mess.

[nextbigthing]

Interested to hear other peoples thoughts on this, but from the little I've read about DSE, the PE guys should be going to jail IMHO (after being stripped of their assets!)

I haven't really followed it, but my understanding is they bought the company, stripped all the inventory and listed it with things looking good on the balance sheet etc, hiding the fact they'd destroyed inventory levels. Then forked it off for a huge sum, IMHO effectively stealing from uninformed investors.

Perhaps investors are to blame but I really think this practice needs to be stopped, perhaps via independent auditors who are held financially liable for anything they miss who in turn can charge the PE firms appropriate large fees.

It's a con and it should be illegal.

Disc; dont hold, never have, so not a sour/burnt holder, just think it's wrong.

[winner69]

Interested to hear other peoples thoughts on this, but from the little I've read about DSE, the PE guys should be going to jail IMHO (after being stripped of their assets!)

I haven't really followed it, but my understanding is they bought the company, stripped all the inventory and listed it with things looking good on the balance sheet etc, hiding the fact they'd destroyed inventory levels. Then forked it off for a huge sum, IMHO effectively stealing from uninformed investors.

Perhaps investors are to blame but I really think this practice needs to be stopped, perhaps via independent auditors who are held financially liable for anything they miss who in turn can charge the PE firms appropriate large fees.

It's a con and it should be illegal.

Disc; dont hold, never have, so not a sour/burnt holder, just think it's wrong.

NBT, nobody was forced to buy DSH shares

As stated in the article linked -

It was the market, not Anchorage, which was at fault for not properly analysing and appreciating the implications of the way the business had been restructured ahead of the IPO. The sense of being ripped off, however, will make the market very distrustful of anything Anchorage might try to float in future.

http://www.businessspectator.com.au/article/2016/1/5/industries/lessons-dick-smiths-breathtaking-implosion

[nextbigthing]

NBT, nobody was forced to buy DSH shares

As stated in the article linked -

It was the market, not Anchorage, which was at fault for not properly analysing and appreciating the implications of the way the business had been restructured ahead of the IPO. The sense of being ripped off, however, will make the market very distrustful of anything Anchorage might try to float in future.

http://www.businessspectator.com.au/article/2016/1/5/industries/lessons-dick-smiths-breathtaking-implosion

True, nobody was forced to. But those that did probably did so in good faith and should be able to do so, IMHO.

[Hoop]

Well my valuation of 20 cents per share was too high. I really am an incurable optimist!

Sorry to see you have a incurable condition SD..Maybe 2016 may fix your ailment :D

Looking for reasons why DSE is in the position it's in....
Most Posters a month or too ago.. SD Winner Percy etc seemed to have nailed it...Its a Marketing thing..you have to stock products that people want..you have to establish a realistic market position within the Retail Market..

Not sure what I mean???...then look at these websites Pricespy (http://pricespy.co.nz/) and PriceMe (http://www.priceme.co.nz/).... look at their hot selling products data and where the best places to buy them ..Then tell me why is DSE not among the likes of the Noel Leemings, JBHiFi's, PB tech, Warehouse, etc....Eh??

I would blame DSE Product Managers and other DSE management long before I'd send a lynch mob towards the Private Equity Outfits who are just today's fashionable whipping boys...

Of interest ...Data from Pricespy and PriceMe shows JBH has stocked out of some of their hot selling products..and their shareprice is looking healthy.

[percy]

Interested to hear other peoples thoughts on this, but from the little I've read about DSE, the PE guys should be going to jail IMHO (after being stripped of their assets!)

I haven't really followed it, but my understanding is they bought the company, stripped all the inventory and listed it with things looking good on the balance sheet etc, hiding the fact they'd destroyed inventory levels. Then forked it off for a huge sum, IMHO effectively stealing from uninformed investors.

Perhaps investors are to blame but I really think this practice needs to be stopped, perhaps via independent auditors who are held financially liable for anything they miss who in turn can charge the PE firms appropriate large fees.

It's a con and it should be illegal.

Disc; dont hold, never have, so not a sour/burnt holder, just think it's wrong.
It is wrong.
Very wrong.
Although the PE guys may have acted within the law,they remain morally bankrupt.
Lesson learnt;never buy anything off a PE firm.!
Luckily for us ST posters picked up the "stitch up" and saved other STders from losing their money.

[h2so4]

Sorry to see you have a incurable condition SD..Maybe 2016 may fix your ailment :D

Looking for reasons why DSE is in the position it's in....
Most Posters a month or too ago.. SD Winner Percy etc seemed to have nailed it...Its a Marketing thing..you have to stock products that people want..you have to establish a realistic market position within the Retail Market..

Not sure what I mean???...then look at these websites Pricespy (http://pricespy.co.nz/) and PriceMe (http://www.priceme.co.nz/).... look at their hot selling products data and where the best places to buy them ..Then tell me why is DSE not among the likes of the Noel Leemings, JBHiFi's, PB tech, Warehouse, etc....Eh??

I would blame DSE Product Managers and other DSE management long before I'd send a lynch mob towards the Private Equity Outfits who are just today's fashionable whipping boys...

Of interest ...Data from Pricespy and PriceMe shows JBH has stocked out of some of their hot selling products..and their shareprice is looking healthy.

Thankful we have sharetrader.co.nz :t_up:

[nextbigthing]

Sorry to see you have a incurable condition SD..Maybe 2016 may fix your ailment :D

Looking for reasons why DSE is in the position it's in....
Most Posters a month or too ago.. SD Winner Percy etc seemed to have nailed it...Its a Marketing thing..you have to stock products that people want..you have to establish a realistic market position within the Retail Market..

Not sure what I mean???...then look at these websites Pricespy (http://pricespy.co.nz/) and PriceMe (http://www.priceme.co.nz/).... look at their hot selling products data and where the best places to buy them ..Then tell me why is DSE not among the likes of the Noel Leemings, JBHiFi's, PB tech, Warehouse, etc....Eh??

I would blame DSE Product Managers and other DSE management long before I'd send a lynch mob towards the Private Equity Outfits who are just today's fashionable whipping boys...

Of interest ...Data from Pricespy and PriceMe shows JBH has stocked out of some of their hot selling products..and their shareprice is looking healthy.

I have only read one article on this which I can no longer find. It alluded to the fact staff/management at DSE were hamstrung by the PE boys as to what they could buy etc, which if true does make them liable.

[nextbigthing]

It is wrong.
Very wrong.
Although the PE guys may have acted within the law,they remain morally bankrupt.
Lesson learnt;never buy anything off a PE firm.!
Luckily for us ST posters picked up the "stitch up" and saved other STders from losing their money.

My thoughts exactly.

This obviously isn't the first time this type of thing has happened. It should be illegal.

[winner69]

hoop said -
I would blame DSE Product Managers and other DSE management long before I'd send a lynch mob towards the Private Equity Outfits who are just today's fashionable whipping boys...

Agree Hoop

A year ago they weren't in too bad a state post IPO - but then they the company spent zillions buying crap stock no body wanted to buy.

They ran out cash with big bills to pay - we know what that Evans eh and the nasty bankers wouldn't lend more.

Been a dog for years - was a turn around really on the cards post Woolworths hocking it off (or giving it away)?

Wonder what the real Dick Smith thinking?

[fungus pudding]

Agree Hoop

A year ago they weren't in too bad a state post IPO - but then they the company spent zillions buying crap stock no body wanted to buy.

They ran out cash with big bills to pay - we know what that Evans eh and the nasty bankers wouldn't lend more.

Been a dog for years - was a turn around really on the cards post Woolworths hocking it off (or giving it away)?

Wonder what the real Dick Smith thinking?

The real Dick Smith said the business was a dog with no future (words to that effect) 5 mins after he was out the door waving the big cheque in the air.

[winner69]

Receiver says - He said the retailer's New Zealand business was profitable and expected to be attractive to potential buyers.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11569422

[trackers]

You would have to be on crack to buy this stock.

Has been a classic private equity play - just look at the stores, empty shelves, stock levels reduced to an unsustainably low level. Got out of several categories in the stores I've visited, eg, DVD's, which is fine. But replaced with? Nothing?

Seem to be specialising in home brand stuff which I hear carries incredible margins, but how? And at what cost to the long term reputation?

Staff levels reduced, and knowledge lower than ever.

I just don't see where Dick Smiths fits in the market any more.

The PE guys have done a fantastic job dressing up this dog, and next to Freelancer.com, if they can sell it as "conservative tech", in this market, people may just buy it for "safety".

Just another tick in the box as to why I'm *slowly* (key word) reducing my exposure to equities.

^ One of the first posts in this thread circa the float in 2013 - Great call here Stranger Danger - Thought I'd give some credit where its due!

[Hoop]

I have only read one article on this which I can no longer find. It alluded to the fact staff/management at DSE were hamstrung by the PE boys as to what they could buy etc, which if true does make them liable.

Yep...fair enough..maybe PE was the rotten core..Wasn't aware of that.....but...hang on!! Anchorage Capital got out via the IPO in December 2013..that's two years ago...
The shareprice since the IPO has been stable until recently..suggesting the debt problem is the making from Management well after the Anchorage Exit?

I'm not defending the moral issues of PE outfits ..but..Are you suggesting that Anchorage Capital is still controlling product management after exiting 2 years ago??

From the August Annual Report the top 20 shareholders seem to be mostly nominee holdings
B. Top 20 Shareholders
The names of the 20 largest shareholders of ordinary shares are listed below:
Rank Name Number held ...%
1 J P MORGAN NOMINEES AUSTRALIA LIMITED 57,141,658 ..24.16%
2 NATIONAL NOMINEES LIMITED 36,176,951.. 15.30%
3 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 34,671,336.. 14.66%
4 CITICORP NOMINEES PTY LIMITED 15,994,889.. 6.76%
5 LMA INVESTMENTS PTY LIMITED 15,330,639.. 6.48%
6 RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 10,028,944.. 4.24%
7 BNP PARIBAS NOMS PTY LTD 9,323,303.. 3.94%
8 AMP LIFE LIMITED 6,356,031.. 2.69%
9 RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 4,221,670.. 1.78%
10 CITICORP NOMINEES PTY LIMITED 2,540,371.. 1.07%
11 MRS MARCELLA DAVIS 727,988.. 0.31%
12 MICHAEL POTTS 727,988.. 0.31%
13 NATIONAL NOMINEES LIMITED 721,723.. 0.31%
14 GWYNVILL TRADING PTY LIMITED 550,000.. 0.23%
15 JOHN SKELLERN 516,019.. 0.22%
16 TABWIT PTY LTD 500,000.. 0.21%
17 DMW CAPITAL PTY LTD 468,182.. 0.20%
18 JATOLI 2 PTY LTD 446,866.. 0.19%
19 MARIO COCCIOLONE 441,205.. 0.19%
20 NEIL MEROLA 438,498.. 0.19%
TOTAL 197,324,261.. 83.43
Balance of Register 39,187,103.. 16.57%
GRAND TOTAL 236,511,364.. 100%

Hmmm..if Anchorage did hamstrung Product Management in the past then I assume after the Anchorage exit the new DSE product management have now had 2 years to rectify those failings...or am I missing something???

It seems from the chart that the market become aware of DSE problems in August 2015....It seems thats well after the Anchorage exit..in which case are they still to blame for the recent demise?
http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosettings=1&symb=au%3adsh&uf=0&type=2&size=3&sid=13816156&style=320&freq=1&entitlementtoken=0c33378313484ba9b46b8e24ded87dd6&time=10&rand=97791502&compidx=aaaaa%3a0&ma=0&maval=9&lf=1&lf2=0&lf3=0&height=510&width=720&mocktick=1

[trackers]

^ Hoop, "Anchorage sold its remaining 20 per cent last September", which basically exactly coincides with the sp falling off the cliff

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11569422

Is it possible that poor inventory decisions made 2 years ago are still on the books? Absolutely - see things like iphone 4 accessories etc - Back then there was probably a decent value attributed to them and they would have been selling alright, whereas now they are basically worthless - and that's just one product line

[winner69]

Receiver says - He said the retailer's New Zealand business was profitable and expected to be attractive to potential buyers.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11569422




Hmm - year to June 15 DSE NZ made $1.3m on $179m of revenues ......and the interest bill was pretty small.

[winner69]

^ Hoop, "Anchorage sold its remaining 20 per cent last September", which basically exactly coincides with the sp falling off the cliff

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11569422

Is it possible that poor inventory decisions made 2 years ago are still on the books? Absolutely - see things like iphone 4 accessories etc - Back then there was probably a decent value attributed to them and they would have been selling alright, whereas now they are basically worthless - and that's just one product line

Appears Anchorage sold out in September 2014

http://stocknessmonster.com/news-item?S=DSH&E=ASX&N=817943

[trackers]

Appears Anchorage sold out in September 2014

http://stocknessmonster.com/news-item?S=DSH&E=ASX&N=817943

Too right.. Lazy NZ Herald! I did have a sneaky check on stockness of notices from around that time last year and there were so many I gave up

[winner69]

Too right.. Lazy NZ Herald! I did have a sneaky check on stockness of notices from around that time last year and there were so many I gave up

They sold out one month after saying they wouldn't because the results were good and they had confidence in the future .....ha ha - good old private equity trick eh

Exact words were
" We are writing to inform you that in light of the recent trading results and our positive view of the Company’s future prospects, we currently have no intention of selling at the prevailing market price.

[winner69]

When Anchorage said they weren't selling at 'prevailing price' the price was $2.00

A month later it was in the $2.20s when they sold. About the highest the price ever got as well.

Pretty sneaky those PE guys eh - but that's what makes the ticket tick.

Hate them or love them - your choice

[Balance]

All very predictable :

http://www.nbr.co.nz/article/dick-smith-shares-trading-halt-ck-183412

"According to Forager Funds, Anchorage "used all the tricks in the book to turn Dick Smith from a $A10m piece of mutton into a $A520m lamb."

"They included (in Forager's words) pre-IPO inventory stripping, ripping cash out of the business, and aggressive accounting around write-downs and how profitabiity was presented to potential investors in the public float."

After Feltex's 'use honey instead of vinegar to trap flies" by Forsyth Barr, it is unfortunately an all too familiar tale.

The class action lawyers must be rubbing their hands with glee at yet another opportunity to make $$$ out of the misery of investors.

[percy]

My thoughts exactly.

This obviously isn't the first time this type of thing has happened. It should be illegal.

No not the first time,and certainly will not be the last time.
The "laws of libel" means you have to be careful warning others.
Bridgecorp survived long after "people in the know" knew it was rotten.A quirk of fate was Bridgecorp applied to join the NZX.
The NZX made Bridgecorp commission an analyst's report on their business.On reading that report the NZX refused to let Bridgecorp list.NOW the fun bit.The report was paid for by Bridgecorp.OK.Bridgecorp OWNED it and it was Bridgecorp's decission that the report was not released..Madness.
Yet the author/analyst did an excellent right up in"Unlimited" magazine which set out the truth.
No one else was prepared to write, or say anything against Bridgecorp as they knew they would have been sued. Bridgecorp were very quick at getting their lawyers involved.

[percy]

Other warning signals.
Watch out for old "ratbag" directors being "born again".
Make sure there are no ex MPs as directors.
Watch carefully who is selling.Don't buy off PE,and others,who have a record of being very wealthy by selling at the top.
Watch out for floats that are with drawn,and then reappear a year or two later.
Joining three or more unprofitable businesses together,to form one profitable business does not work.

[trader_jackson]

Stay away from DSE guys, both as investors and shoppers... That's all I'm going to say

Had a very good feeling this day would come, hence gave anyone who was an investor or buying stock from them some warning before Christmas... I'm not surprised it happened (like several people on here), but what I am surprised at is how things deteriorated so fast.

[Stumpynuts]

Very fortunate that just two weeks before Xmas I got myself a 2014/15 year 50" 100hz Panasonic HD LED for $500 cash from Sylvia Park.
Ex-display model reduced from $1000 but came with no remote (so what?!?)

[fungus pudding]

Very fortunate that just two weeks before Xmas I got myself a 2014/15 year 50" 100hz Panasonic HD LED for $500 cash from Sylvia Park.
Ex-display model reduced from $1000 but came with no remote (so what?!?)
You can install an app on your phone for Panasonic remote for tv.

[jetski1999]

Other warning signals.Watch carefully who is selling.Don't buy off PE,and others,who have a record of being very wealthy by selling at the top.Watch out for floats that are with drawn,and then reappear a year or two later.Joining three or more unprofitable businesses together,to form one profitable business does not work.gees are you talking dick smith or carter holt

[nextbigthing]

In other news, Anchorage is glad to announce its next upcoming float, Hirepool, will provide excellent value for investors.

[Stumpynuts]

You can install an app on your phone for Panasonic remote for tv.


Nah it's not a smart TV, so no internet connectivity directly to my tiv.
Regardless though - Chromecast, streaming sticks and watching sports/movies are widely available on the internet.

[percy]

gees are you talking dick smith or carter holt

You have made my day.!
Always great seeing someone joining the dots.
Maybe I am best neither confirm you are right or wrong.!! ..lol.

[percy]

In other news, Anchorage is glad to announce its next upcoming float, Hirepool, will provide excellent value for investors.

We await the prospectus with bated breath.!

[trader_jackson]

In other news, Anchorage is glad to announce its next upcoming float, Hirepool, will provide excellent value for investors.

No need to worry about them bring that to market, remember?... Hirepool is "too good to sell"

[winner69]

Direct Capital sell down in Scales seems to have been ok for new shareholders

Not all private equity are evil as we seem to make out

[trader_jackson]

Direct Capital sell down in Scales seems to have been ok for new shareholders

Not all private equity are evil as we seem to make out

Seems ok... so far (I personally am not to keen on them...)

Then again, I think Summerset was also listed by private equity at $1?

[Stranger_Danger]

Interested to hear other peoples thoughts on this, but from the little I've read about DSE, the PE guys should be going to jail IMHO (after being stripped of their assets!)

I haven't really followed it, but my understanding is they bought the company, stripped all the inventory and listed it with things looking good on the balance sheet etc, hiding the fact they'd destroyed inventory levels. Then forked it off for a huge sum, IMHO effectively stealing from uninformed investors.

Perhaps investors are to blame but I really think this practice needs to be stopped, perhaps via independent auditors who are held financially liable for anything they miss who in turn can charge the PE firms appropriate large fees.

It's a con and it should be illegal.

Disc; dont hold, never have, so not a sour/burnt holder, just think it's wrong.

How can Anchorage be guilty of some "cunning plot"? You could see EXACTLY what the playbook was simply by looking through the shops.

Seriously, there are some investments you need to be smart to either do or avoid.

This was not one of them.

[percy]

No need to worry about them bring that to market, remember?... Hirepool is "too good to sell"

May pay to keep that in mind should they try again.!!
Then ask them why they changed their mind?.!..lol.

[Stranger_Danger]

Had a very good feeling this day would come, hence gave anyone who was an investor or buying stock from them some warning before Christmas... I'm not surprised it happened (like several people on here), but what I am surprised at is how things deteriorated so fast.

Me too. I pretty much knew the destiny of this one the day it IPO'd. But if you asked me last week if it would have gone broke this week, I'd have said no way.

Maybe the banks have a role to play in the year ahead?

[h2so4]

How can Anchorage be guilty of some "cunning plot"? You could see EXACTLY what the playbook was simply by looking through the shops.

Seriously, there are some investments you need to be smart to either do or avoid.

This was not one of them.

Yep. That's their game...sell the good and the bad....but make them all look good. How else could they sell the bad ones. Buyer beware.

[winner69]

I'm not defending the moral issues of PE outfits ..but..Are you suggesting that Anchorage Capital is still controlling product management after exiting 2 years ago??

From the August Annual Report the top 20 shareholders seem to be mostly nominee holdings
B. Top 20 Shareholders
The names of the 20 largest shareholders of ordinary shares are listed below:
Rank Name Number held ...%
1 J P MORGAN NOMINEES AUSTRALIA LIMITED 57,141,658 ..24.16%
2 NATIONAL NOMINEES LIMITED 36,176,951.. 15.30%
3 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 34,671,336.. 14.66%
4 CITICORP NOMINEES PTY LIMITED 15,994,889.. 6.76%
5 LMA INVESTMENTS PTY LIMITED 15,330,639.. 6.48%
6 RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 10,028,944.. 4.24%
7 BNP PARIBAS NOMS PTY LTD 9,323,303.. 3.94%
8 AMP LIFE LIMITED 6,356,031.. 2.69%
9 RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED 4,221,670.. 1.78%
10 CITICORP NOMINEES PTY LIMITED 2,540,371.. 1.07%
11 MRS MARCELLA DAVIS 727,988.. 0.31%
12 MICHAEL POTTS 727,988.. 0.31%
13 NATIONAL NOMINEES LIMITED 721,723.. 0.31%
14 GWYNVILL TRADING PTY LIMITED 550,000.. 0.23%
15 JOHN SKELLERN 516,019.. 0.22%
16 TABWIT PTY LTD 500,000.. 0.21%
17 DMW CAPITAL PTY LTD 468,182.. 0.20%
18 JATOLI 2 PTY LTD 446,866.. 0.19%
19 MARIO COCCIOLONE 441,205.. 0.19%
20 NEIL MEROLA 438,498.. 0.19%
TOTAL 197,324,261.. 83.43
Balance of Register 39,187,103.. 16.57%
GRAND TOTAL 236,511,364.. 100%



Hoop - Last AR showed this Substantial Shareholders

Ordinary shares No. held Voting Power
Fidelity Worldwide Investment (FIL) 21,353,772 9.03%
LMA Investments as trustee for the NL Abboud Trust 15,345,639 6.49%
Deustche Bank 14,479,955 6.12%
Commonwealth Bank of Australia 14,015,913 5.92%
Perpetual Investments 13,911,035 5.88%
Australian Super 13,047,384 5.52%
AXA Group 12,330,358 5.21%
AMP Limited 11,905,462 5.03%
Capital Group 11,885,123 5.03%

Plenty of smart cookies there eh Hoop

[fungus pudding]

Seriously, there are some investments you need to be smart to either do or avoid.

This was not one of them.


:confused: So what was this one then? :D

[h2so4]

Interesting consencus here.

http://www.4-traders.com/DICK-SMITH-HOLDINGS-LTD-15103489/consensus/

[Stranger_Danger]

Hoop - Last AR showed this Substantial Shareholders

Ordinary shares No. held Voting Power
Fidelity Worldwide Investment (FIL) 21,353,772 9.03%
LMA Investments as trustee for the NL Abboud Trust 15,345,639 6.49%
Deustche Bank 14,479,955 6.12%
Commonwealth Bank of Australia 14,015,913 5.92%
Perpetual Investments 13,911,035 5.88%
Australian Super 13,047,384 5.52%
AXA Group 12,330,358 5.21%
AMP Limited 11,905,462 5.03%
Capital Group 11,885,123 5.03%

Plenty of smart cookies there eh Hoop

What I've never been able to figure out is why does anyone pay a "professional" like the above to manage their money?

I'm not saying an amateur like me never loses - I lose plenty of times. But seriously Blind Freddy saw this one coming. Seldom is something so obvious.

[nextbigthing]

https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/

Seems to be some different views on this. Make of it what you will.

A good lesson for youngish bucks like myself regardless of who's to blame. Just shame it had to be at the expense of many poor unsuspecting investors. Morally corrupt and should somehow be illegal in my opinion.

Disc; Never held or followed, just in for some learning.

[Hoop]

Hoop - Last AR showed this Substantial Shareholders

Ordinary shares No. held Voting Power
Fidelity Worldwide Investment (FIL) 21,353,772 9.03%
LMA Investments as trustee for the NL Abboud Trust 15,345,639 6.49%
Deustche Bank 14,479,955 6.12%
Commonwealth Bank of Australia 14,015,913 5.92%
Perpetual Investments 13,911,035 5.88%
Australian Super 13,047,384 5.52%
AXA Group 12,330,358 5.21%
AMP Limited 11,905,462 5.03%
Capital Group 11,885,123 5.03%

Plenty of smart cookies there eh Hoop

Yep...Winner....a lot were trying to off load in November,,but some were buying & selling.
Australian Super thought it was a good idea to try and catch a falling dagger by buying an extra couple of Million of "cheap" shares during late August Av $1.68 /Sept 2015 $1.33..and mid October sold nearly all ...I guess trying to catch a falling dagger strategy did't go too well (Lesson 1 page 1 in Share Investing for Dummies ..now learn't :D)

also some noted individuals that won't be feeling very happy today either..

Michael Potts (http://dicksmithholdings.com.au/senior-management-team/) 727,988 shares..DSE's Finance Director and CFO
Mrs Marcella Davies (https://www.linkedin.com/in/marcella-davis-5a09a01b) 727988 shares ex DSE..Linkedin says she is now Founder and Principal Consultant at Real People Equity (http://www.peopleequity.com.au/).
John Skellern (http://dicksmithholdings.com.au/senior-management-team/) 516019 shares DSE's Director of Property, Procurement and Supply Chain
Mario Cocciolone (https://www.linkedin.com/in/mario-cocciolone-1a4b8045) 441205 shares ex DSE Now Director of Inskin Cosmedics (https://www.inskincosmedics.com.au/) and O Cosmedics (http://www.ocosmedics.com/).. Marie Enna-Cocciolone (https://au.linkedin.com/in/marie-enna-cocciolone-7211b348) is Founder and CEO of both Companies
Neil Merola (http://dicksmithholdings.com.au/senior-management-team/) 438,498 shares DSE's Director of Marketing.


REALLY!!!:eek2:...This popped up in DSE announcements on 8th October 2015 Bank of America Merrill Lynch..Emerging Stars Symposium... Nick Abboud MD & CEO...An Amazing READ!!!!...PDF file
(https://www.anzsecurities.co.nz/directtrade/dynamic/announcement.aspx?id=3980403)

[Hoop]

https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/

Seems to be some different views on this. Make of it what you will.

A good lesson for youngish bucks like myself regardless of who's to blame. Just shame it had to be at the expense of many poor unsuspecting investors. Morally corrupt and should somehow be illegal in my opinion.

Disc; Never held or followed, just in for some learning.

Asset stripping or a nicer term "restructuring" or any other hostile takeover or demise is a part of business Nature..The Hyenas of the world ends the life of the sick and weak...just how it is in Nature NGT... the strong survive the weak get slaughtered. The key objective is not to become weak or vunerable..its a cruel world out there and us investors have to realise that to enable us to become successful investors....Remember Most rich and powerful people in the world are definitely no Saints..
NBT ..you can not create laws and rules to prevent the Laws of Nature..

Morally wrong it maybe ..Corporate Raiders, Private Equitites, you can't ban them as they are a part of business evolution ... they like Hyena's in the animal kingdom put an end to the inefficient weak species and thereby they cant reproduce..

Investors get caught up in the mess..Yep, Been there done that with Pike River Coal...JBL...Poliofolio full during 2001 crash (using an unsuccessful Buy and Hold long term strategy)...and probably other events I have eliminated from my memory...Us Investors have to be of the hard variety to withstand losses due to injustices and the like and learn to bounce back to become successful...

Emotion..is the enemy in Investing..

Anyway if you think PE's are immoral, what do you think about Receivers..eh? Gift cards will not be honoured .. maybe a few young children bought these after saving up their money for months so give to their parents a nice Christmas present....now that's also immoral..eh? so shall we ban Receivers as well...

[winner69]

Yep...Winner....a lot were trying to off load in November,,but some were buying & selling.
Australian Super thought it was a good idea to try and catch a falling dagger by buying an extra couple of Million of "cheap" shares during late August Av $1.68 /Sept 2015 $1.33..and mid October sold nearly all ...I guess trying to catch a falling dagger strategy did't go too well (Lesson 1 page 1 in Share Investing for Dummies ..now learn't :D)

also some noted individuals that won't be feeling very happy today either..

Michael Potts (http://dicksmithholdings.com.au/senior-management-team/) 727,988 shares..DSE's Finance Director and CFO
Mrs Marcella Davies (https://www.linkedin.com/in/marcella-davis-5a09a01b) 727988 shares ex DSE..Linkedin says she is now Founder and Principal Consultant at Real People Equity (http://www.peopleequity.com.au/).
John Skellern (http://dicksmithholdings.com.au/senior-management-team/) 516019 shares DSE's Director of Property, Procurement and Supply Chain
Mario Cocciolone (https://www.linkedin.com/in/mario-cocciolone-1a4b8045) 441205 shares ex DSE Now Director of Inskin Cosmedics (https://www.inskincosmedics.com.au/) and O Cosmedics (http://www.ocosmedics.com/).. Marie Enna-Cocciolone (https://au.linkedin.com/in/marie-enna-cocciolone-7211b348) is Founder and CEO of both Companies
Neil Merola (http://dicksmithholdings.com.au/senior-management-team/) 438,498 shares DSE's Director of Marketing.


REALLY!!!:eek2:...This popped up in DSE announcements on 8th October 2015 Bank of America Merrill Lynch..Emerging Stars Symposium... Nick Abboud MD & CEO...An Amazing READ!!!!...PDF file
(https://www.anzsecurities.co.nz/directtrade/dynamic/announcement.aspx?id=3980403)

Great read eh Hoop

DSH great example of why the only thing to really look at is Cash Flow Statements and the Reconcilation between Profit and Cash Flow ...at half annually intervals

All was bad with DSH. And a few NZ companies haven't/don't pass the test either

[winner69]

DSH was biggest short ever

What happens to those who haven't closed their positions?

[macduffy]

Remember this?

http://www.anchoragecapital.com.au/case-study-dick-smith

[fungus pudding]

Anyway if you think PE's are immoral, what do you think about Receivers..eh? Gift cards will not be honoured .. maybe a few young children bought these after saving up their money for months so give to their parents a nice Christmas present....now that's also immoral..eh? so shall we ban Receivers as well...

Do the receivers have a choice? Surely they're obliged to treat all unsecured creditors equally. I don't know the law applicable in this field, but I doubt if they are allowed to favour one creditor over another.

[percy]

Do the receivers have a choice? Surely they're obliged to treat all unsecured creditors equally. I don't know the law applicable in this field, but I doubt if they are allowed to favour one creditor over another.

I don't think receivers have a choice.
Yet, surely a customer should be treated differently, than someone whose business is supplying goods and/or services to Dick Smith.
A gift card/laybuy/replacement product, not being honoured means to me the brand is now worthless,so that in turns will make the chances of the receivers selling the business even more difficult.I think the term used is "shooting themselves in the foot."
Trouble is receivers get paid before any one else.But they never caused this mess.

[percy]

You would have to be on crack to buy this stock.

Has been a classic private equity play - just look at the stores, empty shelves, stock levels reduced to an unsustainably low level. Got out of several categories in the stores I've visited, eg, DVD's, which is fine. But replaced with? Nothing?

Seem to be specialising in home brand stuff which I hear carries incredible margins, but how? And at what cost to the long term reputation?

Staff levels reduced, and knowledge lower than ever.

I just don't see where Dick Smiths fits in the market any more.

The PE guys have done a fantastic job dressing up this dog, and next to Freelancer.com, if they can sell it as "conservative tech", in this market, people may just buy it for "safety".

Just another tick in the box as to why I'm *slowly* (key word) reducing my exposure to equities.

The above was posted by Stranger Danger on 17/11/2013.
Reading today, what Gerry Harvey said in The Age, it was easy to see DSH was just a huge stitch up.
Licenced highway robbery Ned Kelly would have be proud of.

[Hoop]

Great read eh Hoop

DSH great example of why the only thing to really look at is Cash Flow Statements and the Reconcilation between Profit and Cash Flow ...at half annually intervals

All was bad with DSH. And a few NZ companies haven't/don't pass the test either

Yeah Winner...
It's another Reminder for us investors to gather the "up to the moment" data and check the validity and not to be lazy and accept as gospel..nor take anything for granted not even the words of an CEO

Once the Marketing Academics have finished their post mortem I think DSE will make a brilliant Case Study for Tertiary Students majoring in Marketing..

The media focus on the PE factor is causing a smoke screen...This is only one factor of many that caused DSE demise..but have got the spotlight on then....Media knows the general public"s natural abhorrence to any investor making quick millions in a short period of time and the media will milk it for all it's worth..

NZ Herald has done just that ..presented the PE outfit as the bad boy (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11569767) and the chief cause of DSE woes...obviously appealing to the social/emotional consciousness of the general public. I didn't see any Dick Smith interview on NZH website page so us readers have to take their word as gospel..

Stuff has presented a more Businesses approach presented more factors that possibily caused the demise (http://www.stuff.co.nz/business/75647248/the-anatomy-of-dick-smiths-decline) ...ie..over indebtness with DSE management not aware of the financial conditions outlined in the bank loans...product mix failure..the recent sudden cash flow problem and the suicidal fire sale to gain quick cash flow the "unwise" focus in pushing company (DSE) brand on generic products instead of promoting well known brands e.g Samsung etc..stocking too much "less appealing to the customer making DSE vulnerable to having to use heavy discount methods to shift stock..Growing too quickly too many stores opening in short time period causing logistic and financial problems..etc...Stuff did have a quick video of the Dick Smith interview..I couldn't see Dick Smith criticizing Anchorage Capital to the point that the NZH can make headlines on it...

[Hoop]

To add balance..Apologies if it's already been linked on this thread.. I not sure so I post it here

To all Private Equity firms out there willing to succeed....This is a step by step analysis of how Anchorage Capital Partners made their $millions out of the Dick Smith Company investment according to Matt Ryan (Forager Funds Management) (https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/)

[winner69]

Why banks pulled the plug so quickly - Boxing Day top of the cash cycle.

The banks will get their money back pretty quickly methinks


https://foragerfunds.com/bristlemouth/why-banks-pulled-the-pin-on-dick-smith/

[winner69]

Fire sale on the cards

Maybe Anchorage will buy them back ......fix them and IPO again

[percy]

Should that happen I would expect most suppliers and landlords will ask for payment/rent in advance.Attracting good staff would be a challenge.
That would focus their attention.

[macduffy]

Fire sale on the cards

Maybe Anchorage will buy them back ......fix them and IPO again

Always a possibility!

http://www.theage.com.au/business/after-dick-smith-private-equity-will-quickly-shrug-off-the-bad-reputation-20160106-gm05e9.html

[winner69]

Should that happen I would expect most suppliers and landlords will ask for payment/rent in advance.Attracting good staff would be a challenge.
That would focus their attention.

In NZ they have/had a $41m lease liability in non-cancellable leases.

Administrator will sort that out. Some landlords going to have empty expensive real estate for a while I think

[nextbigthing]

Popped in to a DSE store to check it out. Christmas tree on offer for $59. It's the 6th of Jan and they have an isle of Christmas trees for $59. Good luck with that.

[macduffy]

There's been a lot of criticism of private equity firms and their IPO's over the Dick Smith debacle. Certainly, they've had their spectacular failures but this Rothschild analysis of the comparative performance of PE-sponsored and non-PE IPO's in 2014 indicates that both breeds have their successes and failures. Caveat emptor remains the watchword for IPO's, regardless of who the vendor might be!

http://www.avcal.com.au/documents/item/1002

[h2so4]

Popped in to a DSE store to check it out. Christmas tree on offer for $59. It's the 6th of Jan and they have an isle of Christmas trees for $59. Good luck with that.

55" dick smith tv $749.

[h2so4]

....might replace the 42" Panasonic which cost $2400 that crapped out 2 months after warranty expired.

[winner69]

Well, that was short and sharp ..... and decisive

Every store to close

http://www.stuff.co.nz/business/77286573/dick-smith-to-close-all-stores

[h2so4]

Well, that was short and sharp ..... and decisive

Every store to close

http://www.stuff.co.nz/business/77286573/dick-smith-to-close-all-stores

Still an outperform recommendation here. LOL!

http://www.4-traders.com/DICK-SMITH-HOLDINGS-LTD-15103489/consensus/

[Hoop]

Creative accounting to the point of absolute fraud...How on earth was this sort of stuff allowed to happen..where were the controls?..How was a listed company allowed to get away with management malpractice for so long and to the point of bankruptcy....Where is the shareholders protection.

A reason why DSE was overstocked with crap....helps create an earnings mirage..eh
"In periods of low profitability, some rebates provided a short-term incentive for management to prefer a certain supplier and product, because the rebate increased profit in the month of purchase, rather than when the product was sold (as ordinarily would be the case).

This practice (not admitted to) made my blood boil..if true I hope the bastards get locked up.
In a bizarre exchange, Giles referred to a document produced by Cooke for the receivers, which the former company secretary described as "a calculation to look at the cash conversion".

"There is a sentence that runs across the bottom," Giles said.
"It says, 'Sell private label product bought at 98 cents, back to the supplier at 78 cents, and rebuy it at 78 cents or even 77 cents, with a 'risk' related adjustment ... reflecting a commercial arms-length trade would get it into stock at the new rates, generate cash and make a profit.'"

The quotes came from NZ Herald Article 6/9/16 (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11704206)

Makes one wonder how many other listed companies out there are doing these types of hidden practices.... I guess us investors and suppliers will only find out when all the skeletons fall out of the cupboard at the next economic low tide.

[Jay]

I'm liked the bit about having 12 years stock of private label AAA or AA batteries - based on the last 4 weeks sales volume - must have got them at a good price or the exchange rate was very favourable :-)

[winner69]

Creative accounting to the point of absolute fraud...How on earth was this sort of stuff allowed to happen..where were the controls?..How was a listed company allowed to get away with management malpractice for so long and to the point of bankruptcy....Where is the shareholders protection.

A reason why DSE was overstocked with crap....helps create an earnings mirage..eh
"In periods of low profitability, some rebates provided a short-term incentive for management to prefer a certain supplier and product, because the rebate increased profit in the month of purchase, rather than when the product was sold (as ordinarily would be the case).

This practice (not admitted to) made my blood boil..if true I hope the bastards get locked up.
In a bizarre exchange, Giles referred to a document produced by Cooke for the receivers, which the former company secretary described as "a calculation to look at the cash conversion".

"There is a sentence that runs across the bottom," Giles said.
"It says, 'Sell private label product bought at 98 cents, back to the supplier at 78 cents, and rebuy it at 78 cents or even 77 cents, with a 'risk' related adjustment ... reflecting a commercial arms-length trade would get it into stock at the new rates, generate cash and make a profit.'"

The quotes came from NZ Herald Article 6/9/16 (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11704206)

Makes one wonder how many other listed companies out there are doing these types of hidden practices.... I guess us investors and suppliers will only find out when all the skeletons fall out of the cupboard at the next economic low tide.

A division of Wesfarmers got caught doing the same thing with rebates last year!!!

[Baa_Baa]

So much for their auditors Deloitte who no doubt have provisioned funds for the pending suit.

[troyvdh]

Great to hear recievers going after Directors in Oz.Just thinking on how many occasions have directors in NZ have had to pay back divs etc.

[Ace]

Class action against dick smith for those who may be interested.

http://dshclassaction.com.au/