Australia's oldest electronics retailer, Dick Smith, has kicked off a stock liquidation sale at stores across Australia and New Zealand as its operations are wound up over the next eight weeks.
But shoppers hoping to grab a bargain on Friday were largely underwhelmed, with significant discounting mostly contained to Dick Smith's private-label products, which have been widely blamed for the company's troubles.
Dick Smith to close remaining doors for good
NAB delivers $6.48 billion profit
Telstra chair: you can't blame companies for avoiding tax
How does the insurance industry prepare for climate change?
Business leaders on oligopolies: things are going to change
Is another rate cut possible?
Australia's million dollar workplace bullying payout
Land use rules hamper housing
Dick Smith to close remaining doors for good
Fairfax retail reporter Catie Low explains the impact of Dick Smith's store closures after receivers failed to find a buyer.
It's the second major sale in three months for the chain, which launched a desperate pre-Christmas clearance in a bid to prop up sagging sales. That sale failed to save it from the clutches of nervous bankers, who forced it into receivership in January.
Receiver Ferrier Hodgson announced on Thursday that the troubled chain's 301 stores in Australia and 62 in New Zealand would be shut, putting close to 3000 staff out of work. The remaining stock is understood to have a book value of about $200 million.
Dick Smith was advertising discounts of 5 per cent on Apple products, 10 per cent on Bose audio equipment, 15 per cent off Beats headphones, and from 20 to 40 per cent off all other products.
But there were few signs of the promised "fire sale" at Dick Smith's store on Bourke Street, Melbourne, on Friday morning.
Stoic staff in sombre mood
The mood was sombre as staff members stoically served a stream of shoppers drawn by curiosity and the promise of a bargain.
Daniel Maunders, an architect, has been a frequent Dick Smith shopper and popped into the store after hearing the news.
He was browsing the range of private-label phone cases after his last one cracked, and was cautiously interested in headphones.
"People are saying don't buy Dick Smith products because there's no warranty – you want security," he said. "They have tried to be competitive in a tough market, but I think the writing was on the wall."
Betty Caldwell, aged in her 80s, was looking to replace her kaput radio and was disappointed to learn the store would be closing its doors.
"I think it's terrible really; I rely on this place for information," Ms Caldwell said. "I find the staff have always been excellent. It's a terrible situation to be in."
Word of the fire sale brought in Ben Cerlienco, whose mate wanted a new television.
"Business is business," said Mr Cerlienco, who mostly shops at JB Hi-Fi. "I always found the prices better and the range better [at JB Hi-Fi]. I don't come looking for Dick-Smith-brand products, I come looking for Samsung or Sony."
Another shopper, also in the market for a radio, said the model he wanted was still cheaper elsewhere. "I'll wait for the last week," he said.
Eventually, a member of staff politely asked Fairfax Media to leave the store. "It's a hard enough day as it is," he said.
Bernie Smith, secretary of the NSW branch of the Shop Distributive and Allied Employees' Association said Dick Smith workers were feeling "numbness and shock".
He said the announcement came as a shock to some workers who had been hoping a Chinese buyer might save the company.
"Stock was still moving around and there was a bit of hope still there. So when the announcement was made, it still came as a bit of a shock," Mr Smith said.
"It was quite wrenching for people."
After speaking to a receiver, Mr Smith said he was confident workers would receive their full entitlements.
Consumer advice group Choice warned shoppers to stick to big-brand products so they could still seek recourse from the manufacturer if they bought a faulty product.
"In the case of Dick-Smith-branded products, it'll be much harder to seek a remedy and you'll join a long list of unsecured creditors," Choice spokesman Tom Godfrey said.
Receiver promises to honour warranties
But receiver Ferrier Hodgson disputed this, with a spokeswoman insisting that all warranties would be valid.
Ferrier Hodson would refund faulty items itself if they could not be repaired or replaced quickly, even after Dick Smith stores close, she said.
Harvey Norman founder and boss Gerry Harvey said on Friday he thought the "world had gone mad" when investors paid $520 million for Dick Smith when it floated on the sharemarket in 2013, and hit out at private equity firm Anchorage Capital, which bought the chain from Woolworths in 2012.
"Five minutes later this bloke [Anchorage Capital] dresses it up and sells it for $500 million, and I'm looking at this and saying 'I don't believe this; this business is stuffed'. I'm thinking I wouldn't buy these shares for 10¢, let alone $2," Mr Harvey said.
Ferrier Hodgson has engaged British retail stock realisation specialist Hilco to help with selling the remaining stock and the store closure process, with Hilco responsible for organising sale signage and instructing store managers.
The sale will continue over the next eight weeks, or until the stores are shut down or all stock is sold. Only the Move Airport stores will remain open while discussions continue.
Despite a significant number of expressions of interest from local and overseas parties, the sale process had not resulted in any acceptable offers, Ferrier Hodgson said.
The news dashed the hopes of any staff hopeful that a new owner could rejuvenate the brand and save their jobs. A staff member told Fairfax Media they had been reassured that all entitlements would be paid but it would take a couple of months for all money to go through.
Dick Smith's debts total about $400 million, including $140 million to its banks, National Australia Bank and HSBC.
Administrator McGrathNicol said it expected to bring forward the second creditors' meeting from August to early June in light of the liquidation.