David Jones to close 19 stores in major retail restructure
David Jones will close 19 of its 38 stores by the end of the year, receiver FTI Consulting announced today, as it moves to restructure the 188-year-old department store less than a week after its collapse.
Nine of the closures are in Westfield centres run by Scentre Group, the chain’s largest landlord. These include Carousel in Perth, Parramatta and Hornsby in Sydney, and Woden in Canberra.
The stores will keep trading for now.
FTI said there was no set date for the closures, but expected them to stop trading by the end of the year. Staff were told today, and a consultation period will run over the next seven days.
“Whilst the impacts are highly regrettable, the receivers believe the steps are unavoidable if David Jones is to continue as a viable business and these measures will help give David Jones the best chance for a sustainable future,” FTI said in a statement.
The receivers said the restructure aligned with a plan David Jones and its owner, Anchorage Capital Partners, put to landlords before the collapse. Under that plan, the retailer proposed keeping 12 stores open at full rent and another seven if landlords agreed to rent relief, while closing the remaining 19.
The David Jones stores that are closing
The nine Westfield closures are Carousel and Booragoon (Garden City) in Perth; Parramatta, Hornsby and Warringah Mall in Sydney; Marion and West Lakes in Adelaide; Woden in Canberra; and Newmarket in Auckland. Scentre will keep eight David Jones stores.
Five closures are in centres managed by GPT Group: Highpoint and Malvern Central in Melbourne, Macarthur Square and Macquarie Centre in Sydney, and Sunshine Plaza on the Sunshine Coast.
GPT and its wholesale fund own Highpoint, Macarthur Square and Sunshine Plaza. Malvern Central is owned by UniSuper, and Macquarie Centre by UniSuper and Cbus Property.
David Jones will also leave The Glen in Melbourne’s Glen Waverley, which Vicinity Centres co-owns with MA Financial, and Stockland’s Green Hills near Maitland, NSW.
QIC’s Robina Town Centre on the Gold Coast and Wollongong Central, south of Sydney, owned by a joint venture of Haben and JY Group, are also on the list.
The Perth CBD store on Hay Street Mall is the only city flagship to close. The building is owned by Singapore-listed Starhill Global REIT, which has said David Jones occupies 95.1 per cent of its lettable area. Starhill added that its distribution per unit would fall about 10.6 per cent if the space sat empty for a year.
The Elizabeth Street store in Sydney and the Bourke Street store in Melbourne will stay open.
How David Jones collapsed
David Jones was placed into voluntary administration last Thursday, with McGrathNicol appointed as administrator. Its lender, Hilco Capital, separately appointed FTI Consulting as receiver and manager.
The appointments followed the breakdown of talks with Scentre over closures and rent. Scentre chief executive Elliott Rusanow said the landlord made “a generous offer” to owner Anchorage Capital Partners that would have kept David Jones trading, but it had “disappointedly been rejected”.
Scentre is the largest landlord, with 17 stores covering about 200,000 square metres. The group said David Jones had not paid rent since September.
David Jones employs more than 6000 people and owes suppliers about $100 million, the Australian Financial Review reported on Monday.
Administrator McGrathNicol has given creditors until Monday, November 16, to lodge proofs of debt ahead of the first creditors’ meeting on Tuesday.
