No plans to list Dick Smith
Speaking on the company's business strategy for the first time since its private equity takeover last year, chief executive Nick Abboud said the brand - which operates in one of the most highly competitive online markets, technology - was in a "powerful position" given it had no core debt.
"Anchorage (Capital) are very confident with the strategy that management have put into the business. It allows us to look at many options - and one of those would be an IPO," he said. "The timing of that - obviously we need to perform for a period of time. Once we get some runs on the board then we will allow a wider market to get involved."
Woolworths, which sold the business to Anchorage for $20 million in 2012, announced it had severed ties with the retailer completely after it agreed to take an advance payment of $94 million from Anchorage instead of a percentage of profits if the business was later sold.
Mr Abboud said this large cash payment and the fact that the company had no debt signalled the health of the business. "In eight months we've been able to turn [Dick Smith] around," he said.
"We've had a lot of cash in the bank, and the management team are confident about where we're going to take the business."
Mr Abboud took up his role at Dick Smith after a 19-year stint with Myer, where he finished as the company's executive general manager. During this time he oversaw the business when it was under the control of private equity firm TPG.
Anchorage, which specialises in poaching underperforming business and turning them around for a profit, signalled in April that it had put another retailer - Colorado - up for sale less than two years after it wound the business up with co-owners Ice Canyon. The group swooped on the Dick Smith brand in September 2012, when Woolworths agreed to sell it for roughly the same price it had paid founder Dick Smith for it years earlier.
Frequently Asked Questions about this Article…
Dick Smith has played down rumours of an immediate sale. Anchorage Capital says an IPO is one possible option in future, but timing depends on the business performing well and getting "runs on the board" before allowing a wider market to get involved.
CEO Nick Abboud said the Dick Smith brand is in a "powerful position," highlighting that the business has no core debt, has had strong cash in the bank, and that management is confident after turning the business around in about eight months.
Woolworths sold Dick Smith to Anchorage for about $20 million in 2012. Woolworths later severed ties after agreeing to take a $94 million advance payment from Anchorage instead of a share of any future sale profits — a deal the article says signals the business’s improved financial health.
Anchorage specializes in buying underperforming retailers and turning them around for a profit. The group has indicated confidence in management and has used similar approaches with other retailers, including putting the Colorado chain up for sale less than two years after restructuring it with co-owners Ice Canyon.
Nick Abboud became CEO of Dick Smith after a 19-year career at Myer, finishing as executive general manager. His experience includes overseeing businesses under private equity ownership (such as when Myer was controlled by TPG), which is relevant to managing a turnaround under Anchorage’s ownership.
According to the CEO quoted in the article, Dick Smith has no core debt, and the company has had substantial cash in the bank — points Anchorage and management cite as evidence of the business’s improved health.
Based on the article, investors should monitor clear performance improvements, cash position, debt levels (the article notes no core debt), and management commentary about strategy — since Anchorage says an IPO or sale would be considered only after the business has demonstrated consistent results.
Anchorage restructured Colorado with co-owners Ice Canyon and then put the retailer up for sale less than two years later. That pattern illustrates Anchorage’s model of buying underperforming retailers, improving them, and then considering a sale or exit once they’ve been turned around.
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