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Ailing Dick Smith stores on the chopping block

Retailer Dick Smith is facing the closure of up to 100 stores across New Zealand and Australia after its 2011 profits halved from the previous year.

Retailer Dick Smith is facing the closure of up to 100 stores across New Zealand and Australia after its 2011 profits halved from the previous year.

According to the company's December financial statement, profit/comprehensive income for the year ended June 2011 was $3.6 million, down from $7.1 million for the year ended June 2010.

It lists $103 million in assets, the majority of which lies in inventory.

Yesterday Australian retailer Woolworths revealed it intended to restructure and sell the Dick Smith chain.

Dick Smith has 386 stores in Australasia and Woolworths chief executive Grant O'Brien said a number of unsolicited approaches from would-be buyers had been received.

"A divestment of Dick Smith will enable the Woolworths group to focus more investment on serving customers in its core business," O'Brien said.

Woolworths has earmarked A$300 million ($386 million) for the payment of rent on stores that close.

Market commentator Arthur Lim told Fairfax the retail scene in New Zealand was tough and even Dick Smith competitor JB Hi-Fi had failed to match local growth to that in Australia.

Lim believed the New Zealand stores would be in the firing line.

"I would be very surprised if they don't take a very sharp knife [to the New Zealand stores]."

Some could be cut before a sale, which would be a logical move.

"Nobody wants to buy underperforming operations in today's environment," Lim said.

Founder Dick Smith fears the business will be sold to an overseas company and said he would declare war on Woolworths if that happened.

He started Dick Smith in 1968 and Woolworths bought the chain in the 1980s.

He told AAP Australia was moving closer to the point when everything would be foreign-owned and Dick Smith meeting such a fate would mean "further destruction of Australia".