The transformation of the Dick Smith group across the Tasman is only surface deep, analysts say.
Private equity group Anchorage Capital Partners plans to sell 80% of Dick Smiths for nearly $A344.5 million and to list the shares on the ASX next month. It bought it from Woolworths just over a year ago for $A94 million.
Devon Funds Management's Tama Willis said it was remarkable how quickly it's come back to market.
"If you look at the top line, or the sales environment, it's still reasonably challenging for retail companies, even for Dick Smith," Mr Willis said.
The prospectus numbers made it a "reasonable" investment, and it was coming to the market at a discount to the sector, he said.
"But you really have to have some confidence that the cost reduction strategy, the efficiencies that they're guiding to, can actually be achieved, and that's probably the most important factor in this IPO (initial public offering).
"The other point is you have to get some assurance that the new Dick Smith management can effect the turnaround that Woolworths clearly couldn't."
Milford Asset Management analyst Victoria Harris said there was more risk than return with the offer.
"The one thing that kind of stood out at me was the quick turnaround. Woolworths only sold it 12 months ago and now they're trying to sell it for three times the valuation, so that doesn't sit well with me," Ms Harris said.
The company was expecting 400% profit growth from 2013 to 2014, which they expected to come from their transformation of their stores - "a pretty ambitious forecast", she said.
The industry was competitive and Ms Harris did not believe the return would outweigh the risks.
Dick Smith has 359 stores in New Zealand and Australia and expects to generate sales of $1.2 billion in the 2014 financial year.