Aussie retail billionaire Gerry Harvey has poured cold water on talk of a pre-Christmas fire sale by embattled trans-tasman electronics seller Dick Smith, saying such a move would be like "committing suicide".
There has been speculation in the Australian media that Dick Smith is preparing to launch a "70 per cent off everything" sale this weekend.
High levels of excess stock forced the retailer to abandon its full-year profit forecast on Monday, sparking a severe sell-off in its ASX-listed shares.
Deutsche Bank analysts Michael Simotas and Daniel Wan said in a report this week that the company's discounting could force competitors to following suit the lead-up to Christmas.
That's raised the prospect of a price war that would be great for consumers but damaging for electronics retailers' profit margins during the crucial festive period.
On Tuesday Dick Smith's director of investor relations, Michael Cooke, said high inventory levels were a problem on both sides of the Tasman.
The company operates 62 stores in New Zealand.
"I won't go into what's going to be discounted and how much by, but we're certainly going to have very attractive pricing on a wide range of products," Cooke said.
Harvey, co-founder of the Harvey Norman retail chain, told the Australian newspaper that a fire sale would only make matters worse for Dick Smith.
"They are not making any money if the sell everything in a fire sale," he said. "They will lose a lot of money. Why would they do that? That's committing suicide."
Dick Smith's sales slump has left the firm - which had already slashed profit guidance in October - facing a A$60 million write down.
Managing director Nick Abboud said on Monday that the write down and uncertain outlook for trading meant Dick Smith was unable to stand by its previous profit forecasts.
"We remain cautious on the outlook for the Christmas trading period," he said.
Dick Smith shares slumped to a record low of A20c on Monday, but have gained back some ground over the course of this week, recently trading at A41.5c.
That's still well below the retailer's A$2.20 initial public offering price for its 2013 sharemarket float, which took place after private equity firm Anchorage Capital purchased the business for A$94 million in 2012 from supermarket operator Woolworths.
The IPO valued the company at A$520 million.
Dick Smith had a market value of A$99 million this afternoon.