David Jones Close Half Its Stores as 19 Locations Face Closure
David Jones will consult staff at 19 stores marked for closure as receivers begin an urgent restructure. The locations will keep trading for now, with closures anticipated by year-end. The retailer employs more than 6,000 people across 38 stores.
Receivers FTI Consulting said Wednesday that David Jones will consult staff at 19 of its 38 stores earmarked for closure, putting nearly half its network at risk as the retailer restructures.
The stores will continue trading for now. FTI expects them to cease trading by the end of the year, though it has not set a final closure date.
Consultation begins at 19 stores
David Jones employs more than 6,000 staff across its stores. The proposed closures cover seven locations in New South Wales, three each in Victoria and Western Australia, two each in Queensland and South Australia, one in the Australian Capital Territory, and the chain’s sole New Zealand store in Auckland.
“As part of this restructure, the receivers have commenced an immediate consultation process for all staff associated with 19 stores that have been identified for closure,” FTI said in a statement.
The plan largely affects smaller-format stores, while the retailer’s city flagships are set to remain open. FTI said it would proceed with an “urgent restructure of the business”.
The company entered voluntary administration last week after years of steep losses. Its chief executive, Erica Berchtold, told suppliers the business could not continue operating as it had.
“Put simply, our store portfolio is no longer the right shape for the business, and this change is about creating a network that is financially sustainable for the future,” Berchtold said in correspondence.
Administrators seek a buyer
FTI has day-to-day control of David Jones’ operations under a dual appointment. Administrators McGrathNicol are seeking a buyer or a new injection of capital.
Hilco Global, the retailer’s primary secured lender, appointed FTI to protect its financial interests. Hilco plans to place representatives in stores marked for closure from Thursday, as the company steps up sales and promotions.
“These representatives will have a greater presence in the stores that are closing to assist in accelerating sales and promotional activity at a store level,” Berchtold said.
David Jones’ private equity owner, Anchorage Capital, has long sought a smaller business without long-term leases on underperforming sites. It is expected to make a proposal to administrators to buy back the chain.
The retailer’s main landlord, Scentre Group, said its malls were “practically full” despite the planned closures and that it could bring other brands into its 17 centers that host David Jones stores.
Managers and receivers are due to meet with the Shop, Distributive & Allied Employees’ union on Thursday.
