Dick Smith ‘transformation’ continues with restructure
Dick Smith has announced a restructure of the business including cost cutting of between AU$8 million to AU$12 million to ‘accelerate sustainable future growth’.
The initiatives, which are expected to be implemented by June 2015, will include ‘structural changes’ affecting about 80 positions within the company’s support office.
Nick Abboud, Dick Smith managing director and chief executive, says: “We have taken the difficult decision to streamline our structure, impacting positions at the support office.
“In addition, we are implementing further enhancements to our supply chain. These include a long term contract with a new Australian and international logistics provider which will improve our in-house efficiencies via an end-to-end approach to supply chain management.”
Abboud says cost efficiencies are not the key driver of the initiatives, but the anticipated savings of AU$8 million to AY$12 million ‘are instrumental in reducing our cash costs of doing business to 17.5% to 18% of sales by FY2017.
The company says it will incur an anticipated one-time cash cost of about AU$6.9 million to AU$7.9 million.
The new initiatives are consistent with improvements made to the company’s retail network structure, the integration of the New Zealand and Australian support offices and Auckland distribution centre, the company says.
Dick Smith Electronics was acquired by Australian private equity firm Anchorage Capital Partners back in late 2012, for AU$20 million.
Anchorage specialises in ‘operational turnarounds and special situations investments’. The company says it is a ‘transitionary owner’.
“We are transformation specialist… Our job is to guide companies through a period of transformation that strengthens the core business, and then assist the transition to a natural longer term owner.” Dick Smith Electronics saw New Zealand sales drop 9.3% to AU$97.7 million in the half year to December 28, 2014, though profit for the New Zealand unit more than trebled to AU$952,000.