Concession closures show David Jones is happy to lose Dick Smith

Dick Smith’s receiver Ferrier Hodgson has shut down the 27 concessions in David Jones stores. Photo: Edwina PicklesThe closure of the Dick Smith concessions in David Jones may signal the end of audio visual retailing at the upmarket department store chain.

The receivers of Dick Smith Holdings, Ferrier Hodgson shut down the 27 concessions in David Jones stores on Friday amid speculation over whether the department store’s South African owner Woolworths Holdings will redeploy the concession real estate in its stores.

Woolworths would not say what its plans were for the space except to say it would “consider its options in relation to audio visual as part of its regular review of the category mix and the broader electrical and appliance offering”.

The Dick Smith-branded concessions have traded out of David Jones since late 2013, selling audio visual equipment, including blockbuster brands such as Apple.

However, there has been talk that David Jones wasn’t happy with this arrangement for some time.

The decision to shut the concessions suggests Ferrier Hodgson quickly identified them as one of the least profitable parts of the Dick Smith operation as it works to find a buyer for failed retail chain.

One source close to Dick Smith said the concessions were always a weak point in the electronics retailer’s strategy.

“It was quite well telegraphed that David Jones wasn’t happy with what Dick Smith was doing,” he said.

As many as 181 staff stand to lose their jobs over the closure of the concessions. However, David Jones has come to the rescue of some of the employees, committing to re-employ staff who were working for David Jones at the time it entered into the concession agreement.

Dick Smith’s former chief Nick Abboud is understood to have negotiated the agreement for the concessions, which included a minimum sales guarantee.

It’s understood this arrangement meant David Jones received guaranteed income from the Dick Smith concession, irrespective of sales.

Retail analysts suggest the concession deal was as much about building the profile of the brand among David Jones’ big-spending customers as it was selling product.

The Dick Smith concessions accounted for just 3 per cent of the operation’s total sales and were a tiny cog in the operation, which collapsed under the weight of more than $400 million in debts in early January.

Ferrier Hodgson said the relationship between David Jones and Dick Smith would end as of Wednesday, January 27, and that both parties had agreed to the termination terms.

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