Australian chain David Jones collapses after almost 200 years
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The chain’s physical and online stores are continuing to trade while the search goes on for buyers or offers to recapitalise the business.
PHOTO: REUTERS
- David Jones, Australia’s oldest department store, collapsed on 5 November after almost 200 years as shoppers moved to cheaper online rivals.
- McGrathNicol has been appointed voluntary administrators and FTI Consulting receivers, while stores keep trading and buyers are sought.
- Receivers blamed rising costs, an outdated retail footprint and supply-chain problems; CEO Erica Berchtold said the firm has a “well-developed plan” to reset the business.
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CANBERRA – Australia’s oldest department store David Jones collapsed on Nov 5, finally succumbing after almost 200 years to a digital era that sent shoppers to cheaper and nimbler online rivals.
McGrathNicol executives have been appointed as voluntary administrators, while FTI Consulting staff were named receivers, according to a statement.
The chain’s physical and online stores are continuing to trade, while McGrathNicol is seeking buyers or offers to recapitalise the business.
The chain’s old-fashioned and costly template of vast stores with dozens of fashion brands, beauty products and other accessories proved ill-suited to the modern-day consumer.
More recently, the out-of-date business model has collided with a cost-of-living crisis in Australia that has intensified financial pressures on household budgets.
“The current retail trading environment, rising costs, a significant and outdated retail footprint, and supply-chain challenges have led to this point,” said Christopher Hill, one of the FTI Consulting receivers.
Private equity firm Anchorage Capital Partners bought David Jones in 2023.
David Jones has stores at about 38 locations across Australia and New Zealand.
The upmarket retailer was founded in 1838, half a century after Britain started sending convicts to Australia. The company is named after the Wales-born immigrant that opened a store in central Sydney.
“We’ve changed how we shop, when we shop and where we shop,” said Gary Mortimer, a professor at Queensland University of Technology’s business faculty who specialises in retail and consumer behaviour.
“We’ve seen a shift online.”
David Jones has also been hamstrung by long-dated agreements with landlords, which can lumber tenants with unprofitable stores at the wrong locations for years, Mortimer said.
“Commercial leasing isn’t nimble,” Mortimer said. “Maybe 70 years ago, it didn’t need to be.”
David Jones chief executive Erica Berchtold said in the statement that the company has a “well-developed plan on how to reset the business for the future”. She did not elaborate.
Scentre Group, owner of the Westfield malls that are home to many David Jones stores, said on Nov 4 that the retail chain had paid all rent to Sept 30.
David Jones has space at 17 Westfield centres, Scentre said.
According to the Australian Financial Review, talks on Nov 4 between David Jones and landlords failed to produce a resolution.
The discussions had included giving three months of rent relief to the struggling retailer and scaling back its store network, the newspaper said. BLOOMBERG