David Jones
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SYDNEY — David Jones, the 188-year-old department store chain, has been placed into voluntary administration and receivership, putting about 6,000 jobs and one of Australia's best-known retail brands in doubt weeks before Christmas.

The company said its stores and online business would keep trading while the appointed advisers review operations. It is the first time David Jones has entered insolvency in its history.

McGrathNicol was appointed voluntary administrator. FTI Consulting was appointed receiver and manager. Christopher Hill, David McGrath and Joanne Dunn took control as receivers of ACP Riley Street Midco Pty Ltd, the parent company of David Jones Pty Ltd, Inside Retail Australia reported.

The collapse came after talks with its biggest landlord, Westfield owner Scentre Group, broke down, according to ABC News.

Rent dispute

David Jones leases space in 17 Westfield centres. Scentre told the market this week that the retailer had paid its rent up to Sept. 30 but defaulted when it failed to pay an invoice due Oct. 1, according to Business News Australia. The default sparked days of speculation about the company's future.

Scentre said it had made a generous offer to David Jones' private equity owner, Anchorage Capital Partners, that would have allowed trading to continue, and that Anchorage rejected it, Yahoo Finance reported. Landlords hold about $45 million in bank guarantees for David Jones stores that could be used to cover rent, AAP reported.

David Jones reported a pre-tax loss of $95.5 million for the year to June.

Anchorage bought the retailer in 2023 from South Africa's Woolworths Holdings for less than A$100 million, according to New Zealand outlet Newstalk ZB. Anchorage had previously blamed a long period of weak consumer confidence and big structural change across the department store sector for the company's troubles.

British distressed-debt specialist Hilco Global has been David Jones' main financier for the past five months and appointed FTI as receiver, the Australian Financial Review reported.

Staff and stores

David Jones has 37 stores in Australia and one in New Zealand, at Westfield Newmarket in Auckland, and employs about 6,000 people. Chief executive Erica Berchtold addressed staff at the company's Melbourne headquarters Thursday morning.

In a statement, she thanked customers, team members and partners for their support, and described administration and receivership as a chance to restructure the business. She said the company has a well-developed plan to reset the business and would work with the administrators, receivers and its secured lender.

The business is expected to cut its store numbers, ABC News reported. A process to attract offers for a sale or recapitalisation of the company is also expected to begin, according to the Greek Herald.

In a letter to staff obtained by the ABC, Mr. McGrath of FTI said the receivers have ultimate control and responsibility for the group's trading, businesses, property and affairs.

The Shop, Distributive and Allied Employees' Association, the union that represents retail workers, said its priority was keeping as many people in jobs as possible. National secretary Gerard Dwyer said the union would seek to protect workers' legal and financial entitlements if positions are lost. He said the federal government's payday super reforms would help protect workers from losing up to three months of unpaid superannuation when a company collapses.

What shoppers should know

The administration does not mean David Jones will close immediately. The company will keep trading while its financial position and options are assessed, and the receivers could restructure the business, sell it or wind it up.

Consumer advocates are urging caution. Choice chief executive Erin Turner said shoppers should be wary of buying David Jones gift cards ahead of Christmas, ABC News reported. When Dick Smith went into receivership in 2016, customers with deposits or gift vouchers did not get their money back and had their vouchers dishonoured.

Ms. Turner said customers buying items that are in stock should generally be fine as long as the store continues to trade. If David Jones refuses a refund or exchange, shoppers still have rights under Australian consumer law that may entitle them to a refund, repair or replacement from the manufacturer.

The ABC said David Jones and FTI did not respond to questions about how customers would be affected before it published.

An iconic name

Founded in Sydney in 1838, David Jones calls itself the world's oldest continuously operating department store under its original name.

Its Sydney city store is considered unlikely to close, but some stores in Westfield centres could go, according to ABC News. Suppliers, including fashion brands that stock the chain, now face uncertainty. Inside Retail noted that David Jones had long been battling with suppliers over late payments.

What comes next

The receivers and administrators will now review the business, including which stores can trade, while deciding whether to seek a buyer or investor. The company has pointed to a difficult trading environment, rising costs, an outdated store footprint and supply chain challenges as reasons for the collapse.

One retail commentator described the collapse as a turning point for Australian retail. For shoppers, staff and suppliers, the outcome will not be clear until the process plays out.