David Jones, Australia's oldest department store, is facing its gravest crisis in 188 years, with its chief executive reviewing the store portfolio and trading terms with suppliers amid reports the retailer is on the verge of collapse and searching for a financial saviour.
The chain, which operates 38 outlets across Australia and New Zealand and is believed to employ more than 5000 workers, has survived two world wars and the Great Depression in its 188-year history.
A company spokeswoman confirmed to 7NEWS.com.au that Chief Executive Erica Berchtold was conducting "a review of the portfolio of stores across Australia and the trading terms with suppliers and brand partners". "Erica Berchtold's priority is to accelerate the execution of the business's INSPIRE30 strategy and is in advanced discussions with key stakeholders about how David Jones is adapting to the ever-changing retailing landscape," the spokeswoman said.
Berchtold was appointed in June with the aim of sharpening cost efficiency and capability, at which point the company also announced a refinancing partnership with lending facility Hilco. According to The Australian, the retailer is reportedly on the verge of collapse and looking for a financial saviour with deep pockets. It has been reported that David Jones has struggled to pay some suppliers and has lost major brands, including Christian Dior, Gucci and Chanel.
Business strategist and consumer behaviour analyst Barry Urquhart warned the situation was critical. "A boom Christmas trading period will not be a saving grace for David Jones. It will simply delay the inevitable," he told 7NEWS. "David Jones cannot trade out of this situation. The issue is fundamentally capital inadequacy. It is about cash flow, or in short, bottom line, liquidity. Without liquidity, you're sunk."
Associate Professor Carol Tan from RMIT University said the store's history alone would not be enough to save it, but the retail giant could still survive if it downgraded operations and closed a number of stores. "It's got legacy, it's got heritage, but as we can see, heritage is no longer enough," she said. "I am confident that it can be saved, not in the way that they sell right now, but maybe less stores."
Retail property giant Vicinity has reported department store sales are especially slumping, down 6.5 per cent in the past three months alone.
Analysis
Why This Matters
- David Jones is Australia's oldest department store, and its collapse would end a retail institution that has operated for 188 years and employs more than 5000 workers.
- The company's difficulties reflect broader pressure on department stores, with Vicinity reporting a 6.5 per cent slump in department store sales in the past three months.
- Store closures or a financial restructuring could affect shoppers, suppliers and staff across Australia and New Zealand, and reshape the country's luxury retail landscape.
Background
David Jones has been a fixture of Australian retail since the 19th century, positioning itself as a premium department store chain. It now faces a confluence of pressures: rising interest rates and petrol prices have tightened consumer spending, while luxury brands have reportedly left the store and some suppliers have gone unpaid. Chief executive Erica Berchtold, appointed in June, is leading a review of the portfolio and trading terms, and the company recently announced a refinancing partnership with Hilco.
Key Perspectives
David Jones (spokeswoman): says Berchtold is accelerating the INSPIRE30 strategy and is in advanced discussions with key stakeholders about adapting to the changing retail landscape.
Barry Urquhart (business strategist and consumer behaviour analyst): says a strong Christmas will only delay the inevitable, and that David Jones cannot trade out of the situation because the core problem is capital inadequacy and liquidity.
Carol Tan (RMIT University associate professor): says heritage is no longer enough, but the retailer can be saved if it downgrades operations and operates fewer stores.
What to Watch
- The outcome of Berchtold's review of the store portfolio, which could lead to store closures.
- Whether a financial saviour with deep pockets emerges, as The Australian reports the chain is seeking.
- Whether the Christmas trading period provides the cash flow needed to stabilise the business, despite Urquhart's warning that it would only delay the inevitable.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedDavid Jones is reportedly on the verge of collapse after 188 years, with a financial saviour being sought.7NEWS: “After 188 years in business, the chain is reportedly on the verge of collapse and looking for a financial saviour with deep pockets, according to The Australian.”
- SupportedDavid Jones is facing its gravest crisis in 188 years.7NEWS: “Can the beloved department store survive its biggest crisis yet?”
- SupportedThe chief executive is reviewing the store portfolio and trading terms with suppliers and brand partners.7NEWS: “a review of the portfolio of stores across Australia and the trading terms with suppliers and brand partners”
- SupportedThe spokeswoman said Erica Berchtold’s priority is to accelerate INSPIRE30 and that she is in advanced discussions with key stakeholders.7NEWS: ““Erica Berchtold’s priority is to accelerate the execution of the business’s INSPIRE30 strategy and is in advanced discussions with key stakeholders about how David Jones is adapting to the ever-changing retailing landscape,” the spokeswoman said.”
- SupportedDavid Jones has struggled to pay some suppliers.7NEWS: “It has been reported the luxury retailer has struggled to pay some suppliers”
- SupportedDavid Jones has lost Christian Dior, Gucci and Chanel.7NEWS: “and has lost major brands, including Christian Dior, Gucci and Chanel.”
- SupportedUrquhart said a strong Christmas trading period would only delay the inevitable for David Jones.7NEWS: ““A boom Christmas trading period will not be a saving grace for David Jones. It will simply delay the inevitable,” the retail expert told 7NEWS.”
- SupportedUrquhart said David Jones cannot trade out of the situation and that the issue is fundamentally capital inadequacy and liquidity.7NEWS: ““David Jones cannot trade out of this situation. The issue is fundamentally capital inadequacy. It is about cash flow, or in short, bottom line, liquidity. Without liquidity, you’re sunk.””
- SupportedTan said David Jones could still survive if it downgraded operations and closed a number of stores.7NEWS: “Associate Professor Carol Tan from RMIT University believed the store’s history alone wouldn’t be enough to save it, but said the retail giant could still be saved if it opted to downgrade operations and close a number of stores.”
- SupportedTan said David Jones has legacy and heritage, but heritage is no longer enough.7NEWS: ““It’s got legacy, it’s got heritage, but as we can see, heritage is no longer enough,” she said.”
- SupportedTan said she was confident David Jones could be saved, perhaps with fewer stores.7NEWS: ““I am confident that it can be saved, not in the way that they sell right now, but maybe less stores.””
- SupportedVicinity reported department store sales were down 6.5 per cent in the past three months.7NEWS: “Retail property giant Vicinity has reported department store sales are especially slumping, down 6.5 per cent in the past three months alone.”