License article

Dick Smith sees survival alongside Harvey Norman, JB Hi-Fi

Dick Smith is optimistic the troubled chain bearing his name can survive alongside Harvey Norman and JB Hi-Fi but said its $500m valuation from its 2013 IPO was "clearly ridiculous".

Up Next

Amazon's deceptive discounting under investigation

Video duration

More BusinessDay Videos

Dick Smith can survive, says founder

Entrepreneur Dick Smith explains why he doesn't own shares in the company that bears his name.

The electronics goods chain on Tuesday morning announced that advisory firm McGrath Nicol had been called in as administrator, while its major lenders appointed Ferrier Hodgson as receiver.

The entrepreneur told Fairfax Media the company had "done very well" under Woolworths, which paid Mr Smith $25 million for the business in 1982, and promptly converted its product from components for electrical enthusiasts to consumer goods, placing it in a "very competitive field" alongside Harvey Norman and JB Hi-Fi.

"I imagine there is room for three consumer electronics companies, but they need to be well managed" Mr Smith said, noting the company had "changed drastically" since 1968 when he started the store with his wife for $610 in 1968.

He blamed uncritical financial media outlets and Australia's growth-focused economic system for the company's financial fall from grace, saying "most people" would know Anchorage Capital Partners' sale of the company for $520 million after picking it up from Woolworths for $94 million was "impossible - you can't have that type of gain in a short time".


Mr Smith, who considers the present economic system a "Ponzi scheme", says "there's no such thing as sustainable growth" and cited the Dick Smith bubble burst as a "classic case of people going for quick growth and getting into very quick problems". 

 "They [Woolworths] opened too many shops and then ended up in problems with it, and that's why they sold it for $90 million" he said. "I basically don't play the share market because I don't have expertise. I've never owned shares in Dick Smith Electronics or Woolworth or Coles or any of those type of organisations. Too risky for me."

The 1986 Australian of the Year played down the role of his personal brand in the business today, saying he "never considered Dick Smith to be me" but he was "very proud that it has been around for 47 years". 

Mr Smith says there are no Dick Smith stores in his area and his last visit was about 12 months ago to buy an electrical lead. "They had very friendly staff and it was pretty good at the time", he said.


Comment are now closed