‘We have a well-developed plan’: Boss speaks as David Jones collapses
One of Australia’s most iconic retailers is going into administration, with its CEO revealing plans to “reset” the 188-year-old business.
Australia’s oldest department store has entered administration after talks with its landlords broke down.
The boards of David Jones and its owner, Anchorage Capital Partners, held a crisis meeting on Wednesday night.
This morning, the retailer appointed McGrathNicol as administrators of the 188-year-old retail icon and FTI Consulting as receivers.
There will be a staff meeting for David Jones staff later Thursday morning to detail what happens next for the stores and its more than 6000 staff across the company.
In a statement, David Jones CEO Erica Berchtold said there was. “Well-developed” plan to “reset” the business.
“David Jones is an iconic company and so many Australians have stores and memories of visiting DJ’s stores and I think customers, our team members and our partners for their continued support for David Jones through this period,” David Jones CEO Erica Berchtold said.
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“We have a well-developed plan on how to reset the business for the future, and will be working with the administrators, the receivers and our secured lender as we continue to pursue that reset of the business.”
Westfield owner Scentre Group is David Jones’ biggest landlord, with 17 of David Jones’ remaining 38 stores located in Westfield malls.
There are six David Jones stores in Queensland.
Rent had not been paid since September, and the group was “in breach”, Scentre Group chief executive Elliott Rusanow said.
“We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading and that offer has disappointingly been rejected by them,” Rusanow said.
The company had paid $45 million in rent for the first nine months of the year, up to September 30.
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David Jones’ landlords have $45 million in bank guarantees for their stores that could be used to pay rent.
Scentre Group required the guarantees to approve Anchorage Capital Partners’ acquisition of the troubled retailer in 2023.
Scentre Group’s share of the bank guarantees is $30 million, or about eight months of gross rent.
The Sydney-based private equity firm paid $100 million for the 188-year-old retailer, a fraction of what its previous owner had paid nine years earlier.
South Africa-based Woolworths Holdings Limited paid $2.1 billion to acquire the then-ASX-listed group in 2014.
Department stores had declined in relevance in the past five years as consumer habits shifted, analyst Mia Jeremic said.
“Competitive pressures have intensified, with online-only retailers like Amazon and Shein capturing price-sensitive demand, while specialist players like Mecca have responded more quickly to shifting consumer preferences,” the Melbourne-based IBISWorld analyst wrote in a report in April.
In the US, Macy’s began closing 150 stores this year to focus on higher-performing flagship locations, while in Germany, dominant department store operator Galeria Karstadt Kaufhof has shut dozens of outlets.
David Jones’ larger Australian rival, Myer, announced in September it had lost $276 million last financial year, its second-worst year in 126 years of operation.
– With AAP
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