David Jones will close 19 of its department stores, resulting in significant job losses as part of a major restructuring effort, the receivers FTI Consulting announced on Wednesday. This decision affects around 6,000 employees across 38 stores.
FTI confirmed that an urgent restructuring process has begun, and an immediate consultation for staff at the closing stores is underway. While these locations will remain open for now, it is expected they will cease trading by the year’s end.
The store closures include seven in New South Wales, three each in Victoria and Western Australia, two in Queensland and South Australia, one in the ACT, and the only New Zealand store in Auckland.
Currently, FTI controls day-to-day operations while administrators McGrathNicol seek either a buyer or new investment. This upheaval follows years of financial struggles for the retailer, which has struggled to compete amid rising online shopping and standalone upmarket stores. David Jones entered voluntary administration last week.
CEO Erica Berchtold informed suppliers that the current operation model is unsustainable, stating, “Put simply, our store portfolio is no longer the right shape for the business.” Hilco Global, the primary secured lender, plays a crucial role in the situation and has appointed receivers to safeguard its financial interests.
To support the transition, Hilco will place representatives in the stores identified for closure starting Thursday to boost sales activity. Recent documents indicate that suppliers are owed back payments for stock shipped as far back as April, highlighting ongoing financial difficulties prior to the administration.
Anchorage Capital, David Jones’s private equity owner, is anticipated to propose a streamlined version of the business focused on reducing long-term leases on underperforming properties and may seek to repurchase the historic chain, which has operated for 188 years.
The affected stores include locations in Carousel, WA; Garden City, WA; Glen Waverley, Victoria; Green Hills, NSW; and various others across Australia and New Zealand.
