Retail giant David Jones is set to undergo a massive contraction, with its receiver confirming plans to close 19 of the company’s 38 stores across Australia and New Zealand.
The move follows the 188-year-old retailer being placed into voluntary administration less than a week ago. The closures will span multiple states, including major hubs in New South Wales, Victoria, Queensland, Western Australia, South Australia, and the ACT, as well as one location in Newmarket, New Zealand.
David Jones chief executive Erica Berchtold broke the news to staff in a message sent this afternoon, acknowledging the “difficult news” and confirming that a formal consultation period for affected employees is now underway.
“I know how much our stores and the people in them mean to all of us, and this is difficult news for our whole business,” Ms Berchtold wrote. “We all know that the business could not continue operating as it was. Put simply, our store portfolio is no longer the right shape for the business.”
The retailer has confirmed that the affected stores will continue trading through the upcoming peak seasonal period, with final closure dates expected to take place later in the year. In the interim, stock will either be discounted or redistributed to the company’s remaining locations.
The collapse follows a breakdown in negotiations with major landlord Scentre Group, which revealed that David Jones had failed to pay rent on its Westfield properties since September. Consequently, five outlets in Westfield shopping centres, including Parramatta, Hornsby, and Carousel, have been marked for closure due to lack of profitability.
Retail analyst Tom Kierath of Barrenjoey suggested the drastic measures were necessary for the business to survive. “I think the interest will be in a handful of sites rather than necessarily the broader business,” Mr Kierath said. “If it does come back, it will come back in a much smaller, slimline version of its current self.”
Mr Kierath added that a potential future for the brand lies in a “new-look” model, shifting away from massive floor spaces toward flagship stores that prioritize food, beverage, and unique customer experiences.
As the company navigates its restructuring, administrators McGrathNicol have set a deadline of next Monday for creditors to submit proof of debt. A first creditors meeting is scheduled for Tuesday, to be held remotely. The firm is also expected to apply to the NSW Supreme Court to extend the sale and recapitalisation process, giving the group more time to secure its future.
While the future of the brand remains uncertain, the company confirmed that all superannuation payments for its 6,000 employees are up to date, complying with new pay-day laws introduced earlier this year.
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