The owners of 188-year-old department store David Jones are racing to secure the company's future beyond Christmas, holding urgent talks with landlords and suppliers as the upmarket retailer battles mounting cash flow losses, a breach of its loan covenants and a wave of designer defections to rival Myer.
Owners of the upmarket department store David Jones are in urgent discussions with landlords and suppliers over the business's future beyond Christmas, as private equity owner Anchorage Capital intensifies its turnaround effort while the company navigates mounting cash flow issues.
David Jones has been unprofitable for years, deepening its losses from $74.1 million to $95.5 million in the year to June 29. Lender Hilco Capital, which specialises in distressed businesses, confirmed it has provided funding above the agreed facility to allow the retailer to increase stock holdings ahead of the critical Christmas period.
“Hilco remains supportive of the business, and any inference otherwise is false,” a spokesperson said.
An Anchorage Capital spokesperson said directors are in “intense” active discussions to make a decision on the long-term future and size of the department-store business by Christmas, which could involve some store closures. The spokesperson rejected reports that restructuring adviser McGrathNicol had been appointed. It was reported by The Australian Financial Review that David Jones has breached a minor covenant, a condition that gives Hilco the right to seize control of the business.
Several Australian luxury and designer brands have left David Jones for rival Myer, including Effie Kats, South Australian-founded Acler, Significant Other and Aston Studio. R. M. Williams ended its relationship nine months ago. LVMH-owned Dior, Gucci and Chanel have pulled some product lines, and Country Road Group has axed nearly 100 of its 283 concession stores across David Jones' network.
Erica Berchtold, who became the company's first female chief executive in late June, is working on a turnaround for the business, according to a company spokesperson.
The company's troubles have not gone unnoticed by customers. Shoppers on the online discussion platform Reddit have been encouraging each other to use their David Jones gift cards as soon as possible out of concern the retailer could collapse.
Mid-market rival Myer, which operates 57 stores, is also struggling, recording losses of $276.5 million in the 2026 financial year. Department stores globally are fighting to stay relevant as shoppers turn to standalone brands and online shopping amid cost-of-living pressures.
Analysis
Why This Matters
- David Jones is a 188-year-old Australian retail icon; its potential collapse or major downsizing would reshape the country's luxury shopping landscape and impact flagship retail precincts.
- The outcome will test the viability of the traditional department store model against the shift to online shopping and standalone designer stores.
- Any decision on store closures will affect shopping centre landlords, retail employment, and the broader Australian retail property market.
Background
David Jones has been under financial stress for months, booking deepening losses under private equity ownership. It has already downsized its footprint, given entire floors back to landlords, and lost a string of high-end concessions to rival Myer. The business is heavily reliant on the Christmas trading period, which typically generates two-thirds of annual profits for department stores.
Key Perspectives
Anchorage Capital: says directors are in “intense” active discussions to decide the business's long-term future by Christmas, which could involve store closures, and rejects reports that a restructuring adviser has been appointed.
Hilco Capital: says it has funded David Jones above the agreed facility to allow it to stock for Christmas, and remains supportive of the business, calling any inference otherwise false.
Erica Berchtold (CEO): is leading a turnaround for the business, having been appointed the company's first female chief executive in late June.
Reddit users: are encouraging each other to use their David Jones gift cards immediately out of fear the company could collapse.
Designer brands: Effie Kats, Acler, Significant Other and Aston Studio have left David Jones, many to sign exclusively with Myer. LVMH-owned Dior, Gucci and Chanel have pulled some product lines. R. M. Williams ended its relationship nine months ago.
What to Watch
- The Christmas decision deadline: whether Anchorage Capital commits new investment, strikes a rescue deal, or begins winding down the chain or closing stores.
- Further movement in the luxury brand roster: more departures or arrivals of exclusive labels could signal future viability.
- The response from shopping centre landlords and whether rent negotiations reach an impasse.