By Renju Jose
SYDNEY, Nov 5 (Reuters) – Australia’s 188-year-old department store chain, David Jones, was placed into voluntary administration on Thursday, as rising costs, sluggish retail sales and supply chain pressures weighed on its business.
David Jones stores 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.
“A transaction process seeking offers for a recapitalisation of the business or a sale as a going concern will commence immediately, and will be managed by McGrathNicol,” FTI Consulting and McGrathNicol said in a joint statement.
“We will manage this process carefully, mindful of the impact on some stakeholders but also recognising the need for difficult decisions.”
Founded in Sydney in 1838 by Welsh immigrant David Jones, the upscale retailer describes itself as the world’s oldest continuously operating department store.
With about 6,000 employees across 38 stores in Australia and New Zealand, David Jones is one of Australia’s most recognisable brands and predates London’s Harrods by more than a decade.
For generations, Australian shoppers have turned to David Jones for clothing and accessories for milestone occasions, from formal wear to school and graduation attire.
However, like overseas counterparts, the retailer 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 price media reported at the time was about A$100 million ($70.09 million).
David Jones CEO Erica Berchtold said the retailer had “a well-developed plan on how to reset the business for the future.”
She added that the company would work with the administrators, receivers and its secured lender during the voluntary administration process, Australia’s closest equivalent to Chapter 11 bankruptcy.
Luxury US department store owner Saks Global, which battled similar retail trends, 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, offered a lifeline to David Jones, but it was rejected by Anchorage Capital, ABC News reported, citing Scentre CEO Elliott Rusanow.
David Jones has stores at 17 Westfield locations.
In a statement to the Australian Securities Exchange on Wednesday, Scentre said David Jones had paid rent up to September 30.
($1 = 1.4267 Australian dollars)
(Reporting by Renju Jose in Sydney; Editing by Chris Reese and Jamie Freed)
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