2015 was not a banner year for Australian tech retailer Dick Smith Electronics. Following a poor run in the back half of last year, a deep-discount sale that failed to revitalise profits and a share price that had fallen more than 80 percent in 2015, the company has now entered voluntary administration.
Dick Smith made the announcement in a statement posted on the company's website on Tuesday. A further announcement on the company's website, made by receiver Ferrier Hodgson on Tuesday, announced that Dick Smith Holdings had entered receivership.
While the brand's 393 retail locations will continue to operate and some 3,300 employees continue to be paid, the statement said that "due to the financial circumstances...outstanding gift vouchers cannot be honoured and deposits cannot be refunded."
Advisory firm McGrathNicol was appointed to act as the voluntary administrator. Voluntary administration is a process that allows a company with cash flow problems to appoint a third party who can restructure finances and repay its debtors over the course of about a month. In this case, Dick Smith said that the move was necessary to obtain the funding required for continued operation after being unable to find financing elsewhere.
Two years of uninterrupted trading as a public company came to an end this Monday when Dick Smith declared a trading halt ahead of the voluntary administration announcement. When the company was first floated in December 2013, shares sold for AU$2.20. At the time of the trading halt, shares stood at AU$0.36.
While the same statement said that Dick Smith's board remained "confident on the long-term viability of the company" and Ferrier Hodsgon stressed that it would be "business as usual" for Dick Smith, the current financial woes offer no small amount of uncertainty for the future of one of Australia's oldest tech retailers. Mr Stewart of Ferrier Hodgson said "we are immediately calling for expressions of interest for a sale of the business as a going concern."
Updated at 11:56 a.m. AEST: Included information on Ferrier Hodgson receivership.