Australian department store chain David Jones has been placed into voluntary administration due to financial difficulties. The 188-year-old retailer has struggled with rising costs, sluggish retail sales, and supply chain pressures. David Jones will continue to operate under the control of FTI Consulting, the appointed receivers, while the firm reviews current operations.
McGrathNicol has been appointed as voluntary administrators to oversee the process. A transaction process seeking offers for a recapitalisation of the business or a sale as a going concern will commence immediately. The administrators will manage this process carefully, mindful of the impact on stakeholders. David Jones has about 6,000 employees across 38 stores in Australia and New Zealand.
Founded in Sydney in 1838 by Welsh immigrant David Jones, the retailer describes itself as the world's oldest continuously operating department store. It predates London's Harrods by more than a decade and is one of Australia's most recognisable brands. For generations, Australian shoppers have turned to David Jones for clothing and accessories for milestone occasions.
However, like overseas counterparts, David Jones has struggled for more than a decade as the rise of online shopping and competition from fast-fashion chains have steadily eroded its traditional department store business model. Its latest owner was private equity firm Anchorage Capital Partners, which bought it from South African retailer Woolworths in 2022 for a reported A$100 million.
David Jones CEO Erica Berchtold said the retailer had a well-developed plan to reset the business for the future. The company will work with the administrators, receivers, and its secured lender during the voluntary administration process. This process is Australia's closest equivalent to Chapter 11 bankruptcy in the US.
Luxury US department store owner Saks Global emerged from Chapter 11 in June after nearly five months with fewer than half of its previous stores and a quarter of its debt. Scentre Group, which owns and operates Westfield shopping centres in Australia and New Zealand, had offered a lifeline to David Jones, but it was rejected by Anchorage Capital.
David Jones has stores at 17 Westfield locations and had paid rent up to September 30. The company's administration has significant implications for its employees, customers, and the Australian retail market. The voluntary administration process will determine the future of the business.
Key points
- David Jones has been placed into voluntary administration due to financial difficulties.
- The retailer has struggled with rising costs, sluggish retail sales, and supply chain pressures.
- A transaction process seeking offers for a recapitalisation or sale will commence immediately.
