‘Came in to say goodbye’: Shelves stripped bare as luxury brands desert David Jones

Luxury brands have fled David Jones and left shelves around the country stripped bare as shoppers flocked to lament the once-prestige department store that had been surrendered to administrators and receivers after 188 years.

Gucci, Scanlan Theodore and Oroton were among some of the brands that deserted their concession stores in Melbourne’s flagship Bourke Street store after David Jones staff were informed on Thursday morning that the retailer had finally tipped into collapse.

David Jones’ chief executive and board directors have handed the reins of the business to voluntary administrator McGrathNicol, which will run a sale process for the retailer, while FTI Consulting has been appointed receivers and will handle the company’s operations.

The luxury department store’s collapse leaves 6000 workers’ jobs hanging in the balance and landlords without anchor tenants, and nearly half a million square metres of empty floor space that will need to be filled.

Store staff rolled away empty shelves and glass display cabinets through Bourke Street’s sprawling six-storey store on Thursday, while others were on their hands and knees taping cardboard boxes shut.

Several Michael Kors staff slipped bags into plastic covers, while Valentino was deserted except for a few pairs of shoes and accessories in a glass case. A woman bagging clothes at Scanlan Theodore said, “Scanlan is leaving David Jones. That’s all we can say.”

In Sydney, shoppers flocked to the flagship Elizabeth Street store to look at the freshly installed Christmas display and reminisce. “I’m really, actually sad,” said Lyn Bridle, whose first job was working in David Jones Parramatta. “A department store that survived a depression, two world wars, and now it’s come to this.”

In a statement, David Jones chief executive Erica Berchtold thanked customers, staff and brand partners “for their continued support for David Jones” during this period.

”David Jones is an iconic company and so many Australians have stories and memories of visiting DJ’s stores,” she 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.”

FTI Consulting senior managing directors Christopher Hill, David McGrath and Joanne Dunn have been appointed receivers and managers of David Jones’ holding company (ACP Riley Street Midco Pty Ltd) by the companies’ secured lender Hilco following the appointment of voluntary administrators.

“David Jones’ physical and online stores are continuing to trade under the control of the receivers, whilst they review the current operations,” FTI said.

“We understand the current retail trading environment, rising costs, a significant and outdated retail footprint, and supply chain challenges have led to this point,” FTI receiver Hill said.

“Voluntary administration and receivership provides breathing space and an opportunity to restructure the business. We will manage this process carefully, mindful of the impact on some stakeholders but also recognising the need for difficult decisions.”

The statement said a transaction process seeking offers for a recapitalisation of the business or a sale as a going concern will start immediately and will be managed by the voluntary administrators, McGrathNicol.

British investor and distressed business lender Hilco said it had injected David Jones with additional funding considered by David Jones’ directors to be “critical”, but chose to appoint receivers after negotiations fell over.

“We acknowledge the significant impact on employees and this iconic 188-year much-loved Australian brand,” said a Hilco spokesperson in a statement. “We will continue to support the David Jones business to keep trading while it is recapitalised and new owners are found.”

Suppliers were emailed at 9:52am AEDT advising that FTI Consulting would be issuing a letter with further information.

“We recognise that you will have questions about what this means for your relationship with David Jones,” Berchtold said in an email to suppliers seen by this masthead.

“We greatly value the relationships we have with our suppliers and partner sand appreciate your continued support of David Jones and our customers during this time.”

Stores facing closure include David Jones locations in Westfield Parramatta and Warringah Mall in NSW, Carindale, Indooroopilly Shopping Centre, Robina Town Centre, 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, according to analysis by financial services firm MST Marquee.

The collapse will wipe out the investment by Anchorage Capital and is expected to generate significant losses for unsecured creditors. This includes gift voucher holders and suppliers which are believed to be owed tens of millions of dollars.

The collapse was triggered after the department store operator’s private equity owners failed to reach a deal with major landlord Scentre Group on store closures and its rent bill.

Westfield owner Scentre Group, which operates 17 shopping centres in which the prestige department store is located, rejected a restructuring proposal put forward by David Jones. A counter-proposal by Scentre was subsequently rejected by David Jones’ board of directors on Wednesday.

Scentre Group chief executive Elliott Rusanow said David Jones had not paid rent since October and “therefore are in breach”.

“We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading,” Rusanow said in a statement. “That offer has disappointingly been rejected by them.”

David Jones’ initial restructuring proposal to Scentre involved closing nine stores in its shopping centres and in February exchanging $45 million in bank guarantees held by Scentre for equity in the retailer.

Consumer psychology researcher and Macquarie University professor Jana Bowden urged shoppers to go to stores and use their gift cards.

“There’s an imminent risk to gift cardholders. They need to get to the stores and spend those immediately before they are unable to. Customers also need to be checking their click and collect items and making sure they have picked them up ahead of potential administration,” she said.

“Once that happens it’s all over and customers will also have to deal with changing policies for returns and change of mind purchases once the administrators set in.”

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