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As they get ready to offload or close more than a hundred Dick Smith stores, the head of Woolworths has said that the chain is not a dud operation.Speaking on ABC radio Grant O’Brien, the CEO of Woolworths who is trying to sell the consumer electronics and IT stores to either a foreign or local investor, has said that the group is not a failure and that Dick Smith was still a substantially profitable business.
Currently there are 386 Dick Smith stores between Australia and New Zealand. Woolworths recently said that they will close up to 100 of these stores before the sale over two years as part of an accelerated rationalisation.
The decision to close off Dick Smith stores followed a report which revealed the cost of investment in the chain was disproportionate to its revenue.
“The investment and management attention given to Dick Smith have been disproportionate relative to its position within the Woolworths Group,” O’Brien said recently.
The group is up for sale at a time when the likes of Harvey Norman are claiming that they are set to reduce their exposure to IT and consumer electronics. At a recent briefing of journalists on their disappointing results which saw Harvey Norman sales fall 10.2% and profit before tax earnings fall 17.69%, Harvey Norman’s Chairman told the Financial review that he preferred “bedding and vacuum cleaners” ahead if IT and CE products.
One major vendor told ChannelNews after hearing the news said “This is Gerry beating up the CE & IT vendors to get new vendor discounts. He knows that technology can be a profitable part of their business especially if he can extract further discounts”.
Last week Woolworths said they are set to book $300 million in restructuring charges and that they plan to close over of their 384 stores.
O’Brian told the ABC “It’s a business that is growing share but it’s a business in a form that doesn’t fit within our portfolio moving forward. So it’s not a failed business. It’s simply a format and style of retail that we don’t think we’re the best owners of moving forward and we’ve made a proactive decision.”
