Australia’s oldest department store collapsed into voluntary administration last week after years of steep losses
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David Jones is set to shutter half of its department store network, triggering mass job losses under a sweeping restructure, the appointed receivers said on Wednesday.
David Jones employs more than 6,000 staff across 38 stores.
The receivers FTI Consulting said in a statement that it would proceed with an “urgent restructure of the business”.
“As part of this restructure, the receivers have commenced an immediate consultation process for all staff associated with 19 stores that have been identified for closure,” FTI said.
“For the immediate term these stores will continue trading and while there is no final date for the closures, we anticipate they will cease trading by the end of the year.”
The closures comprise seven stores in New South Wales, three each in Victoria and Western Australia, two each in Queensland and South Australia, one in the ACT, and David Jones’s sole New Zealand store in Auckland.
Under a dual appointment, receivers FTI has day-to-day control of operations, while administrators McGrathNicol seek a buyer or fresh injection of capital.
The upheaval follows years of steep losses after Australia’s oldest department store failed to carve out a profitable niche in a sector disrupted by online competitors and stand-alone upmarket stores.
The company collapsed into voluntary administration last week. The David Jones chief executive Erica Berchtold told suppliers the business could not continue operating as it was.
“Put simply, our store portfolio is no longer the right shape for the business, and this change is about creating a network that is financially sustainable for the future,” Berchtold said in correspondence viewed by Guardian Australia.
As David Jones’s primary secured lender, Hilco Global holds a decisive role in the retailer’s fate, having appointed receivers FTI to protect its financial interests.
Hilco will place its workers inside the stores marked for closure from Thursday.
“These representatives will have a greater presence in the stores that are closing to assist in accelerating sales and promotional activity at a store level,” Berchtold said in the correspondence.
In documents released late on Tuesday, David Jones’s administrators revealed they reviewed the private equity-owned department chain’s finances months before it fell into administration.
Some small suppliers are owed money dating back to stock sent in April, well before David Jones missed rent payments and fell into administration.
Its private equity owner, Anchorage Capital, has long sought a slimmed down version of David Jones, free from long-term leases on underperforming sites. It is expected to make a proposal to administrators to repurchase the 188-year-old chain.
The following stores will be closed: Carousel, WA; Garden City, WA; Glen Waverley, Victoria; Green Hills, NSW; Hay Street Mall, WA; Highpoint, Victoria; Hornsby, NSW; Macarthur Square, NSW; Macquarie Centre, NSW; Malvern Central, Victoria; Marion, SA, Newmarket, NZ; Parramatta, NSW; Robina Town Centre, Queensland; Sunshine Plaza, Queensland; Warringah Mall, NSW; West Lakes, SA; Woden, ACT; Wollongong Central, NSW.
