28 Sep 2012

Dick Smith sale sets value of Allans Billy Hyde stores

Friday 28 September 2012.
(Picture above from Allans Billy Hyde website)

Woolworths has just sold the 325 store Dick Smith chain for just $20 million.

The Dick Smith chain was ‘divested’ because it was a management distraction. After closing unprofitable stores, Woolworths wrote down the value of the chain to just $20 million, despite the remaining stores being profitable and with a reputed $200 million stock and asset value in place.


Annual sales were $1,570,000,000 – 1.57 billion. The profit in the last year was $24.6 million, and the chain employs 4,500 people.

This amazing transaction assisted the Woolworths share price downwards this morning.

Without exploring the strange, short term-ism of this sale, or pondering the reluctance of Woolworths management to actually, umm, MANAGE, this augers badly for Allans Billy Hyde stores.


With just a week before most or all of the stores are shut down by the liquidator, rumors of rescue so far have proven just rumors. Now the true value of the chain, which accounted for around 20% of all music equipment sales – as much as $75 million a year – is crystallized.

Using the Dick Smith valuation, the value Allans Billy Hyde chain of 26 company owned stores is just $1.6 million. But wait: sales per store at Dick Smith were $4.8 million but at Hydes sales were under $3 million.

Then there’s the flagship store problem at Hydes, with big rent for Sydney and Melbourne CBD stores.

Finally there’s the niggling business of profitability – Dick stores made money, Hydes lost money.

So our valuation is very kind and at the top of the range. The bottom of the range is zero, and that looks like what the liquidators will get, unless someone (hello Con Gallon at Gibson Australia) trumps up some money for the name alone.

Our sincere condolences to the several hundred staff. Our biggest raspberry to the founding management for selling the thing to suits after abusing CX for reporting the obvious link between Musiclink and the retail stores.


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