The founder of electronics chain Dick Smith has told Australian media outlets that "greedy bankers" were behind the collapse of the company he founded nearly 50 years ago.
Electronics retailer Dick Smith Group, which collapsed last month, announced yesterday it would close its 363 stores in Australia and New Zealand after its receivers couldn't find a buyer.
Nearly 3000 workers will lose their jobs - 430 of them in New Zealand.
Australian entrepreneur Dick Smith, who has not owned the business since 1982, told the Herald Sun that he thought the chain had a future ahead of it before its value was destroyed by a hasty and overvalued market float two years ago.
"I'm angry that these greedy bankers have destroyed a business that could have kept going for a long time," he told the Herald Sun.
Smith said he hoped Australia's corporate regulator would investigate the events around the collapse.
"I'm very proud that a business I started with $610 has lasted for 48 years and employed thousands of people," he said.
"But this is a completely unnecessary collapse that has been driven by greed."
He later told news.com.au that owner of Harvey Norman should be wary: "If Gerry Harvey's not careful, he's going to be next. I just reckon there's no money in consumer electronics - that's why I sold out 30 years ago. And Gerry should realise that quickly."
Receiver James Stewart yesterday said there had been no acceptable offers made to buy the chain. "The offers were either significantly below liquidation values or highly conditional or both."
The stores will be closed over the next eight weeks, affecting 2890 staff, including 430 in New Zealand.
Stewart said the announcement was disappointing for employees, who were told of the decision today.
"We would particularly like to thank the Dick Smith employees for their support and patience during the receivership process," he said.
Receivers Ferrier Hodgson said the entitlements of New Zealand employees who were made redundant ranked ahead of secured creditors, and were expected to be paid in full up to a limit of $22,160.
The receivers had been considering offers for the business.
Dick Smith collapsed into receivership on January 5 owing roughly A$140 million to secured creditors, including HSBC and National Australia Bank, and around A$250 million to unsecured creditors.
Chris Wilkinson, of consultancy First Retail Group, said he wasn't surprised the chain was shutting down.
"It just didn't have relevance with consumers any more - it had lost a huge amount of goodwill and you just can't recover that," he said. "Essentially they were in an untenable position."
In the wake of the collapse, receivers Ferrier Hodgson revealed Dick Smith gift vouchers wouldn't be redeemed, prompting an angry response from some consumers.
The retailer had been struggling to gain traction in the ultra-competitive electronics retail market.
The collapse also sparked much debate about the complex financial engineering used by private equity firms like Anchorage Capital, which acquired Dick Smith for around A$100 million in 2012 from supermarket operator Woolworths and floated it on the Australian stock exchange the following year for five times that value.
Wilkinson said one of the main strategic errors made by Dick Smith was its move into low value, house-branded products.
"You need extreme volumes to actually make that stack up in expensive retail sites like downtown Auckland, for example," he said. "I think Dick Smith lost its way a long time back."
Wilkinson said Dick Smith was a "unique situation" and didn't signal the impending demise of other major retail chains as a result of competitive pressure such as the rise of online shopping.
"We don't see any other [failures] waiting in the wings."
Timeline: Rise and fall of Dick Smith
1968: Dick Smith, a young entrepreneur and electronics technician, opened a car radio installation business beneath a carpark in Sydney. Smith said he started the business with $610.
1970s: Interest in electronics and CB radio boom led to expansion.
1980: More than 20 stores in Australia and during the decade expanded to NZ.
1982: Smith completed sale to Woolworths, there was rapid expansion helped by PC boom and diversification. By late last year there were 393 stores in Australasia.
2012: Woolworths sold Dick Smith to Anchorage Capital Partners for less than A$100 million ($106 million) which the following year launched a A$534 million public listing. Smith told the Herald Sun yesterday this was where it all went wrong.He said the market float was hasty and overvalued. "I'm angry that these greedy bankers have destroyed a business that could have kept going for a long time," he said.
2015: Sales slowed dramatically and left the firm with excess stock in the lead-up to Christmas that had to be heavily discounted in a bid to bring in cash. Shares slumped more than 80 per cent. Competition was stiff from online competitors, as well as bricks-and-mortar players such as JB Hi-Fi. The company's net debt sat at A$41 million ($43.8 million) on June 28.
January 5, 2016: Put into administration and receivers Ferrier Hodgson appointed. The company owed roughly A$140 million to secured creditors, including HSBC and National Australia Bank, and around A$250 million to unsecured creditors. The receivers said they would consider offers for the business.
February 26: Receivers announce that all 363 Dick Smith stores will close. Receivers said there had been no acceptable offers made to buy the chain. "The offers were either significantly below liquidation values or highly conditional or both," a statement said. Nearly 3000 workers will lose their jobs - 430 of them in New Zealand.