Breaking: Retailer's future in doubt as David Jones calls in administrators - ABC News & Headlines – Australian Broadcasting Corporation
The future of David Jones is in question just before Christmas. (ABC News: Fletch Yeung)
Australian retailer David Jones has been placed in administration.
The 188-year-old department store's collapse comes after negotiations with key landlord Westfield broke down.
The department store's chief executive is addressing staff this morning at the company's Melbourne headquarters.
The retailer is behind on rental payments and its collapse will leave staff and suppliers such as fashion brands in the dark.
It is expected to rationalise store numbers, with it currently having 38 sites.
McGrath Nicol has been appointed as the voluntary administrator.
Separately Hilco, which is one of its lenders, has appointed Christopher Hill, David McGrath and Joanne Dunn of FTI Consulting as joint and several receivers and managers to protect its loans.
In a statement, McGrath Nicol said David Jones's physical and online stores would continue to trade under the control of the receivers, while they reviewed the current operations.
"David Jones is an iconic company and so many Australians have stories and memories of visiting DJ's stores and I thank customers, our team members and our partners for their continued support for David Jones through this period," chief executive Erica Berchtold said in a statement.
"We have a well-developed plan on how to reset the business for the future and will be working with the Administrators, the Receivers and our secured lender as we continue to pursue that reset of the business".
Receiver Christopher Hill said the retail trading environment, rising costs, a significant and outdated retail footprint, and supply chain challenges all led to this point.
"Voluntary administration and receivership provides breathing space and an opportunity to restructure the business. We will manage this process carefully, mindful of the impact on some stakeholders but also recognising the need for difficult decisions," Mr Hill said.
The union that represents retail workers, the Shop, Distributive and Allied (SDA) Employees Association, said its immediate focus was on keeping as many people in jobs as possible.
National secretary Gerard Dwyer said the SDA was seeking to "protect and prioritise" the legal and financial entitlements of any workers affected by redundancies.
The union said it was pursuing two key objectives: preserving jobs wherever possible, and ensuring workers received all entitlements owed to them if positions were lost.
Mr Dwyer said the SDA welcomed the federal government's payday super reforms, arguing they would help protect workers from losing up to three months of unpaid superannuation in the event of a company collapse.
Retail analyst Matthew Bailey, an associate professor at Macquarie University, said the company’s woes had been a long time in the making.
He said it appeared outer-metropolitan stores would likely close and any remodelling would focus on putting its upmarket offerings in affluent areas.
Iconic department store David Jones is a major tenant in prominent Australian shopping strips. (ABC News: Fletcher Yeung)
"There will be a significant rationalisation and there needs to be some sort of investment in reinvigorating the brand, bringing back customer service, providing a quality and enjoyable retail experience in the stores," he said.
But the long-term viability of the store will hang on a buyer wanting to take on the risk of an aging business model.
"Every year, we get these millions of dollars in losses. It's possible to turn that around but the store would be innovating from a position of weakness."
The chain may go back to basics and rely on fewer stores, not more.
"People have very strong memories of department stores. They have been a really important part of Australian life," Dr Bailey said.
