David Jones: 19 of 38 Stores Face Closure in Australia
David Jones administrators are expected to announce plans to close 19 of the retailer’s 38 Australian stores as they seek a buyer or new investment. The closures could cost thousands of staff their jobs, while potential bidders have until Friday to register interest.
David Jones could close 19 of its 38 Australian stores, putting thousands of jobs at risk as administrators seek a buyer or new capital for the retailer.
FTI Consulting is expected to tell suppliers about the proposed closures on Wednesday. The department store entered administration last Thursday after talks with landlords failed.
Rescue bids due Friday
McGrathNicol is seeking a buyer or fresh investment, while FTI Consulting is running the business as receiver. Administrators have set a Friday deadline for expressions of interest.
Australian and overseas suitors are considering the retailer. A separate report has suggested it could return to private equity firm Anchorage Capital Partners, its owner.
The first creditors’ meeting is scheduled for next Tuesday. Administrators said they would seek more time to pursue a sale or recapitalization, potentially delaying a second meeting on the retailer’s future by three months.
Restructuring discussions began months earlier
Documents published late Tuesday show administrators, Anchorage representatives and lender Hilco Capital met on July 27 to discuss David Jones’ financial performance and possible restructuring plans. The documents show no further engagement until late October.
David Jones chief Erica Berchtold met McGrathNicol on October 28 for contingency planning. On November 4, the day before the retailer entered administration, Anchorage group director Simon Woodhouse spoke twice with administrator Shaun Fraser and requested draft appointment documents for a board meeting the next morning.
The documents also show Anchorage had sought a review of limited financial information as early as April. McGrathNicol was engaged by law firm Corrs Chambers Westgarth on Anchorage’s behalf.
Before the collapse, David Jones had considered keeping 12 stores open at full rent and seven more if landlords agreed to rent relief. The remaining 19 would have shut, according to the reported restructuring plan.
Family member warns against price race
Charles Edward Lloyd Jones, a fifth-generation member of the founding family who worked for the retailer until 1993, said a new owner would need to reduce store space and numbers while offering customers something distinctive.
“If you don’t have a unique offer, then it’s a race to the bottom with price,” he said. “And then if it’s a race to the bottom with price, people start cutting staff and when they start cutting staff the service diminishes.”
FTI said sales and customer traffic had reached record levels since the administration began, even as fashion brands removed stock and suppliers held back deliveries. It did not provide sales figures or a comparison period.
