David Jones, recognised as the world's oldest continuously operating department store still trading under its original name, has entered voluntary administration after 188 years of trading. The move places the future of the historic retail giant, which employs around 6,000 staff, under threat.
The company's owners say its 43 stores across Australia and New Zealand attract about 50 million visits annually and serve five million customers, including at flagship stores in Sydney and Melbourne.
Rent arrears and rescue talks collapse
The decision to declare voluntary administration follows David Jones' failure to pay rent to Westfield, whose shopping centres host a number of David Jones stores, according to the Daily Mail. Dozens of stores are expected to close before Christmas, mostly in Westfield shopping centres.
The voluntary administration follows the breakdown of rescue talks with major landlord Scentre Group, Westfield's parent company, the Daily Mail reports. Scentre claimed on Wednesday that David Jones had breached its lease agreements by failing to pay October's rent.
David Jones had sought a break from rent payments and permission to close several stores before their leases expired, the Daily Mail continues. It also reportedly asked landlords to release about $70 million held as security against its leases so it could pay staff and suppliers.
CEO reassures staff and customers
David Jones CEO Erica Berchtold has been adamant that the brand will continue to trade in-store and online. "For today, our stores and online operations remain open and trading," she wrote to staff, according to the Daily Mail. "You remain employed and should continue your normal duties unless you are directly advised otherwise."
"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," Ms Berchtold reportedly said. "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."
Stores likely to close and gift card advice
Stores reportedly considered highly likely to close include Westfield Parramatta and Warringah Mall in New South Wales; Carindale, Indooroopilly Shopping Centre, Robina Town Centre and Sunshine Plaza in Queensland; Westfield Marion in South Australia; Westfield Doncaster and Southland in Victoria; and Carousel, Booragoon and Karrinyup Shopping Centre in Western Australia, as per analysis by financial services firm MST Marquee.
This week, shoppers were urged to use up their gift cards before any further financial woes or store closures. Customers with David Jones gift cards have been assured that they can still be redeemed.
Administrators appointed and ownership history
Insolvency firm McGrathNicol has taken over as administrators while receivers from FTI Consulting also have been appointed. Staff are expected to be briefed on exactly what the administration means for their jobs.
Founded in Sydney in 1838, David Jones is recognised as the world's oldest continuously operating department store still trading under its original name. The empire prided itself on its in-store shopping experience and global reputation, launching successful star-studded catwalk shows featuring some of modelling's biggest names, including Linda Evangelista and Gigi Hadid.
South Africa's Woolworths Holdings bought the chain for about $2.1 billion in 2014, before selling its operating business to Anchorage Capital Partners for $100 million in 2023. David Jones' private equity owner, Anchorage Capital Partners, rejected a deal from Scentre Group that would have allowed the retailer to continue trading, paving the way for administration.
"We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading and that offer has disappointingly been rejected by them," Scentre CEO Elliott Rusanow said.
Retail expert warns of decline
Retail expert Barry Urquhart said the crisis marked the end of an era for the Australian chain. "The inevitability is we will not be seeing David Jones around in the very near future," Mr Urquhart told the Australian Broadcasting Corporation. "Unfortunately, department stores worldwide are in an attrition rate very, very rapid. And in Australia since 1946 or the conclusion of World War II, we've lost over 23 department stores. So the department store model is obsolete and redundant."
The expert said brands like David Jones have insufficient funds to self-sustain, grow, and be competitive in a crowded market. He also identified the Covid-19 pandemic as a major turning point, with lockdowns placing retailers under immense financial pressure. Online shopping has also been taking a growing share of retail sales since the early 2000s, accelerated by the pandemic, with online purchases surging to almost 20 per cent of total sales. For David Jones, which had built its reputation on the in-store shopping experience, the shift was a major blow.
