Australian retailer David Jones has been placed in administration.
The 188-year-old department store’s collapse comes after negotiations with key landlord Westfield broke down.
The department store’s chief executive addressed staff this morning at the company’s Melbourne headquarters.
The retailer is behind on rental payments, and its collapse will leave staff and suppliers, such as fashion brands, in the dark.
It is expected to rationalise store numbers, with it currently having 38 sites in Australia.
McGrath Nicol has been appointed as the voluntary administrator.
Trading to continue
Separately Hilco, which is one of its lenders, has appointed Christopher Hill, David McGrath and Joanne Dunn of FTI Consulting as joint and several receivers and managers to protect its loans.
In a statement, McGrath Nicol said David Jones’s physical and online stores would continue to trade under the control of the receivers, while they reviewed the current operations.
“David Jones is an iconic company and so many Australians have stories and memories of visiting DJ’s stores and I thank customers, our team members and our partners for their continued support for David Jones through this period,” chief executive Erica Berchtold said in a statement.
“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.”
Receiver Christopher Hill said the retail trading environment, rising costs, a significant and outdated retail footprint, and supply chain challenges all led to this point.
“Voluntary administration and receivership provides breathing space and an opportunity to restructure the business,”
Mr Hill said.
“We will manage this process carefully, mindful of the impact on some stakeholders but also recognising the need for difficult decisions,” Mr Hill said.
Staff and unions to be consulted
In a letter to David Jones staff, obtained by the ABC, David McGrath of FTI Consulting said the receivers had the “ultimate control and responsibility” for the group’s “ongoing trading, businesses, property and affairs”.
Mr McGrath also said, “It is likely there will be steps to reduce the retail footprint in the near-term,” and once decisions were made, staff and unions would be consulted.
He confirmed that staff would continue to be paid normally but said the receivers were reviewing unpaid entitlements owed to staff.
Five outlets in Westfield shopping centres have been mooted to close already because they run at a loss, including Carousel in Perth, Parramatta, Hornsby, Woden in Canberra, and Southland in Melbourne.
Analytics firm MST Marquee has looked at the company’s holdings and speculated on all the stores that could potentially close.
“The implications of David Jones entering administration are far reaching,” senior analyst Craig Woolford wrote.
Keeping jobs a priority, union says
The union that represents retail workers, the Shop, Distributive and Allied (SDA) Employees Association, said its immediate focus was on keeping as many people in jobs as possible.
National secretary Gerard Dwyer said the SDA was seeking to “protect and prioritise” the legal and financial entitlements of any workers affected by redundancies.
The union said it was pursuing two key objectives: preserving jobs wherever possible, and ensuring workers received all entitlements owed to them if positions were lost.
Mr Dwyer said the SDA welcomed the federal government’s payday super reforms, arguing they would help protect workers from losing up to three months of unpaid superannuation in the event of a company collapse.
Andrew McKellar, the chief executive of the Australian Chamber of Commerce and Industry (ACCI), said the news about David Jones showed how desperately the country needed “serious economic reform”.
“Australian retailers, like many businesses across the country, are telling us the same thing: costs are rising faster than they can absorb them, rising interest rates will make this worse.
“This is a warning government cannot ignore.“
A spokesperson from David Jones lender Hilco Capital said it had supported David Jones “through increased funding and flexibility to explore a range of options” that Anchorage Capital Partners and management considered critical.
“Ultimately the directors of David Jones and its owners Anchorage Capital Partners have been unsuccessful in their negotiations and have appointed voluntary administrators to the business,” it said.
“Following this we have exercised our right as a secured creditor to appoint receivers and managers.
“We acknowledge the significant impact on employees and this iconic 188 year much loved Australian brand. We will continue to support the David Jones business to keep trading while it is recapitalised and new owners are found.”
Owner of Sydney store ‘assessing situation’
The owner of half of David Jones’s flagship Elizabeth Street store in Sydney, the Charter Hall Long Wale Real Estate Investment Trust (CLW), said it was “assessing the implications” and would “engage with administrators and receivers”.
The future is now unclear for the iconic retailer. (ABC News: Fletch Yeung)
Its holding in the Elizabeth St store contributes about 4 per cent of its net property income.
“CLW holds a bank guarantee in respect of the lease equivalent to approximately 12 months’ rent,” it said in a statement.
“There is no change to the FY27 operating earnings guidance or distribution guidance provided in CLW’s announcement dated 13 August 2026.”
Significant rationalisation needed
Retail analyst Matthew Bailey, an associate professor at Macquarie University, said the company’s woes had been a long time in the making.
“Department stores have not had quality customer service for a long time. Customer service is expensive, and they’ve had to cut costs in order to compete on price, but that undermines their business model,”
he said.
He said it appeared outer-metropolitan stores would likely close and any remodelling would focus on putting its upmarket offerings in affluent areas.
Iconic department store David Jones is a major tenant in prominent Australian shopping strips. (ABC News: Fletcher Yeung)
“There will be a significant rationalisation and there needs to be some sort of investment in reinvigorating the brand, bringing back customer service, providing a quality and enjoyable retail experience in the stores,” he said.
But the long-term viability of the store will hang on a buyer wanting to take on the risk of an aging business model.
“Right now, it depends if someone wants to take on the risk in a sector that has been in decline for a long time,”
Dr Bailey said.
“Every year, we get these millions of dollars in losses. It’s possible to turn that around but the store would be innovating from a position of weakness.”
The chain may go back to basics and rely on fewer stores, not more.
“People have very strong memories of department stores. They have been a really important part of Australian life,” Dr Bailey said.
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Source: www.abc.net.au
