David Jones to close half its stores

David Jones’ has told staff and suppliers that half of its stores will close after the peak Christmas trading period as the receivers in charge of the embattled department store owner attempt to make the business viable again.

A list seen by this publication includes seven stores in NSW – Macquarie Centre, Macarthur Square, Parramatta, Wollongong Central, Hornsby, Green Hills and Warringah Mall, and three in Victoria – Malvern Central, Highpoint and Glen Waverley.

Woden in Canberra will shut, and stores in Western Australia set to close are Hay Street Mall, Garden City and Carousel.

In Queensland, Robina Town Centre and Sunshine Plaza will close as will West Lakes and Marion in South Australia.

“The identification of stores to close is the result of a review conducted to ensure the business is sized appropriately and on a sustainable financial footing for the future of David Jones,” read the FAQ document issued to suppliers seen by this masthead.

The closures are expected to trigger the axing of thousands of staff from David Jones’ current roster of around 6000 employees.

Gift cards can continue to be used, although new ones are no longer available for purchase.

“Our stores continue to trade under updated policies and procedures, including click and collect, online orders, returns and exchanges. Should any of these policies change, customers will be advised at the time of the change,” the document said.

Premium suburban locations such as Melbourne’s Chadstone mall and the recently revamped Chatswood Chase in Sydney’s northern suburbs are expected to survive.

David Jones’ receiver, FTI Consulting, has been approached for comment.

It comes as documents released on Wednesday revealed David Jones’ private equity owners convened a meeting with representatives from insolvency specialist McGrathNicol and lender Hilco as early as July to look at restructuring options, before further meetings in late October led to the formal appointment of voluntary administrators.

Representatives from each party met on July 27 to “discuss and understand David Jones Group’s financial performance and potential restructuring scenarios” and set up a working group to continue regular discussions, according to an initial report to creditors.

Months before, David Jones had asked suppliers to stretch payment terms out to 90 or 120 days, which sparked concerns about the department store’s ability to pay its bills.

Suppliers, hundreds of which have gone unpaid after David Jones’ collapse last Thursday, have been invited to join a first creditors’ meeting at 11am on November 17 via Zoom, and to submit proof of debt forms by 4pm November 16.

Gift cardholders have been redirected to register their claim in an online form.

The July meeting was not McGrathNicol’s first engagement in relation to David Jones this year.

In April, the retailer’s owner Anchorage Capital engaged the insolvency specialist via its law firm Corrs Chambers Westgarth. The law firm and McGrathNicol met eight times for a “review and analysis of limited financial information” of David Jones that month and in May this year.

McGrathNicol emphasised that this engagement was with Anchorage not directly with David Jones.

In March, media reports had revealed insurance companies were now refusing to cover stock supplied to the struggling department store chain, raising fresh questions about the retailer’s ability to stabilise its business. The group was also delaying supplier payments, a practice that continued until administrators were appointed last week.

“Customers are already experiencing the benefits of our recent $250 million transformation program, which has established a solid foundation for long‑term growth. This investment has delivered major store refurbishments, a new mobile app, an enhanced e‑commerce platform, and the introduction of a new loyalty program,” a spokesperson said in March.

In late April a financial update from David Jones reported a significant increase in underlying earnings and sales growth that outperformed the broader retail sector, “signalling the most robust financial performance since its return to Australian ownership”.

“Anchorage is 100 per cent behind David Jones. We have successfully returned this icon to Australian hands, recapitalised the business with a $190 million facility not due to expire until late 2028, and executed a transformation that many said was impossible,” an Anchorage spokesman said in a statement accompanying the financial update.

“David Jones is now debt-lean, operationally efficient, and remains the undisputed home of premium retail in Australia.”

Last month, David Jones also failed to lodge its latest financial statements with the corporate regulator that cover the period mentioned in the financial update. ASIC is investigating the group over its failure to file financial statements.

In relation to the engagement that led to McGrathNicol being appointed administrator, the creditors report also said Anchorage Capital managing partner Simon Woodhouse left the July 27 meeting after discussions about David Jones’ financial troubles and did not take part in discussions about potential restructuring, and no working group was established.

Over several phone calls, meetings and email exchanges from October 22, Anchorage Capital representatives discussed the potential engagement of McGrathNicol as administrator and briefed them on negotiations with landlords.

Anchorage Capital paid $1 million upfront to McGrathNicol on November 4, with an agreement for a further $4 million expected to be signed “in the coming days”.

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