Dick Smith’s new owners are aiming high as they want to be the No 1 retailer for accessories in Oz, its new CEO has declared.
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“I think we still want to be known as the most dominant location for buying your accessories, not walking in and not finding what you want,” Abboud told News Ltd.
“We also see a massive opportunity in online, expanding the categories we’re in and probably moving into some new categories we may not have in the stores.”
Sydney based equity group Ancorage Capital Partners bought Dick Smith from Woolworths for just $20 million, in a deal announced yesterday.
The sale is not an indicator of “doom and gloom” in the electronics industry, according to Telsyte analyst, Sam Yip, but says competition is “fierce” with the rise of parallel imports and retailers online including internationally based players.
“The Dick Smith brand is very old” says Yip, “but still a well recognised one,” he told Channel News.
“Dick Smith has brand equity with Australians but the challenge now is to leverage that brand locally, whether its via sponsorship” or other branding exercises.
“However, its only a matter of time before the market gets swamped with more pure online players, Kogans and catch of the day, offering cheap deals” he cautions.
“Retailers that get customer loyalty will be retained – its all about good customer service, price and delivery.”
However, analysts say the move is a good thing for Woolies and rivals like JB H-Fi.
Woolies sold the retailer for a knock down pricetag of $20m but will also benefit if anchorage chooses to sell on the asset, in the future.
“We consider this to be a positive development for WOW given it removes distraction and eliminates the risk of future operating losses,” says Deutsche Bank retail analyst Michael Simotas.
Referring to the the sale price as “relatively trivial…. the transaction removes a large operating lease obligation” for Woolies.
The sale is also “helpful” for Dick Smith rivals JB H-Fi and Harvey Norman, says Simotas.
“It also increasing the likelihood that the solid gross margin performance FY13 YTD will continue.”
Deutsche Bank have left their estimates for Woolworth unchange.