Dick Smith's administrators have outlined the 8 underlying causes of the company's collapse

McGrathNicol, administrators of the failed electronics retailer Dick Smith, has released the first report for creditors.

The collapse is likely to mean a shortfall to creditors of more than $260 million.

The banks will get some money back, but there’s little prospect of anything for unsecured creditors.

The report by McGrathNicol goes into some depth on the causes of the collapse. In the report's summary, the administrators list them as:

• The market changed. "The consumer electronics market is highly competitive with rapid changes in consumer demand patterns."
• High cost store network. Dick Smith had "a store network much larger than its competitors, and so a higher cost base, with considerable exposure to and reliance on the fast moving office/computer products market".
• Shrinking market share and falling sales "Revenue growth was based on store growth and commercial sales at low margins."
• Too fast. An expansion plan "required considerable financial commitment, utilised all cash resources, required considerable supplier commitment and required bank borrowings".
• Too much on shelves. "Inventory decisions made in this environment were not consistent with consumer demand, and Dick Smith was ultimately left with a considerable level of obsolete and inactive stock, requiring a major write down."
• Sales didn't work. "Clearance sales did not generate sufficient sales or margin to alleviate the cash pressure."
• Finance was too expensive. "Inability to obtain favourable credit terms impacted on stock levels, product mix and store presentation."
• Servicing loans. "Cash flow pressures lead to banking covenants being breached that could not be remedied."

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