David Jones is fighting for its survival as it scrambles to renegotiate deals with multiple landlords, while British investor and distressed business lender Hilco has the right to call in receivers. The 188-year-old retailer, the world’s oldest surviving department store still trading under its original name, is at the closest it has ever come to financial, if not existential, ruin.
Chief executive Erica Berchtold, who was CEO of the now-collapsed Mosaic Brands for just over a year, is tasked with finding a path forward. People with knowledge of the matter say that even in the best-case scenario, the chain’s footprint will be cut from 38 stores to about 12 to 15, with 70 per cent of revenue generated by a third of its existing locations.
The company's history is steeped in glamour and national pride. Queen Elizabeth II visited in 1954, and Christian Dior held his first international fashion parade at David Jones in Sydney in 1948. Founded in 1838 by Welsh merchant David Jones, it was the heart of civic life.
"Department stores generally were very important culture centres and landmarks in Australia," Bailey said. "They were these grand ornate buildings, representative of their cultural and economic power."
South African company Woolworths Holdings paid $2.1 billion for David Jones in 2014. It later sold off properties including Sydney's flagship Elizabeth Street store. Private equity firm Anchorage Capital Partners bought it for a fraction of that price in 2022.
Bailey said personal relationships in commerce have changed fundamentally. “Things you start to get rid of are very close and attentive customer service, building elaborate window displays, and so on because these things cost money and use labour,” he said. He added that department stores evoke nostalgia for a time when economic relationships were less transactional.
Paul Zahra, who led David Jones between 2010 and 2014, said people still stop him in the street to tell him their David Jones stories. He recalled a customer who visited the food hall daily, dressed head to toe in David Jones brands, for whom the store was a place of belonging and an occasion every day.
Berchtold declined to comment for the story.
Analysis
Why This Matters
- The potential collapse of David Jones would remove a historic institution from Australian city centres and result in significant job losses.
- The story highlights the profound challenges facing traditional bricks-and-mortar retail against global online competitors.
- The fate of David Jones is a closely watched indicator for the health of the broader Australian retail property sector.
Background
David Jones was founded in 1838 and by the mid-20th century was the centre of Sydney's civic and fashion life. It hosted Queen Elizabeth II and Christian Dior, and remained family-owned for 142 years. A series of corporate owners in the past few decades have sold off its assets, leading to the current crisis.
Key Perspectives
Matthew Bailey, retail historian and Macquarie University associate professor: Attributes the decline to the loss of personal customer relationships and the cost-cutting that stripped away the services that made the store special.
Paul Zahra, former David Jones CEO: Points to an enduring, deep emotional connection between the store and its customers, many of whom still treat a visit as a special occasion.
What to Watch
- Whether David Jones can renegotiate its lease agreements with landlords, particularly at the Elizabeth Street flagship.
- If Hilco, the distressed-asset lender, calls in receivers before Christmas.
- Which stores will be closed as the chain aims to shrink to a viable core footprint.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedDavid Jones needs another rescue ahead of Christmas.WA Today - Latest News: “For the second time in four years, David Jones will need another rescue just in time for Christmas.”
- SupportedDavid Jones is 188 years old.WA Today - Latest News: “The 188-year-old institution”
- SupportedDavid Jones is scrambling to renegotiate deals with multiple landlords.WA Today - Latest News: “Chief executive Erica Berchtold and Anchorage Capital partners who sit on the board of David Jones are scrambling to renegotiate deals with multiple landlords”
- SupportedHilco has the right to call in receivers.WA Today - Latest News: “At any point, British investor and distressed business lender Hilco has the right to call in receivers.”
- SupportedDavid Jones is the world’s oldest surviving department store still trading under its original name.WA Today - Latest News: “The department store is the oldest surviving one in the world still trading under its original name.”
- SupportedDavid Jones is closer than ever to financial, if not existential, ruin.WA Today - Latest News: “The 188-year-old institution is the closest it’s ever come to financial if not existential ruin”
- SupportedEven in the best-case scenario, the store count is expected to fall from 38 to about 12 to 15.WA Today - Latest News: “Even in the best-case scenario, David Jones’ footprint of 38 stores will be axed by more than half to about 12 to 15, according to people with knowledge of the matter”
- SupportedA third of existing stores generate 70 per cent of revenue.WA Today - Latest News: “with 70 per cent of revenue being made by a third of its existing stores.”
- SupportedBailey said department stores were important cultural centres and landmarks in Australia.WA Today - Latest News: ““Department stores generally were very important culture centres and landmarks in Australia,” says retail historian and Macquarie University associate professor Matthew Bailey.”
- SupportedBailey said customer service and elaborate window displays are things stores cut because they cost money and use labour.WA Today - Latest News: ““Things you start to get rid of are very close and attentive customer service, building elaborate window displays, and so on because these things cost money and use labour,” says Bailey.”
- SupportedErica Berchtold was Mosaic Brands’ CEO for just over a year before the company collapsed.WA Today - Latest News: “Berchtold, who joined Mosaic Brands as CEO for just over a year before it collapsed”
- SupportedBerchtold declined to comment for the story.WA Today - Latest News: “She declined to comment.”