If you still have a David Jones gift card, now might be a good time to cash it in before the retailer’s board meets this evening and turns your voucher into the equivalent of a losing Melbourne Cup ticket.
uncertain
board → have → ticket
The board meeting is expected to perform last rites on what is left of the failing 188-year-old department store operator and put the company into voluntary administration.
asserted
what → expect → administration
David Jones has run out of options and will need the protection of corporate undertakers to keep landlords and lenders at bay.
asserted
Jones → run → bay
But it won’t last long.
asserted
it → last → ?
Its major lender, Hilco Capital, will then appoint its own receiver to restructure and sell the business, and try to recoup its money.
asserted
lender → appoint → money
That will involve drastic surgery to reduce the storied department store chain to a more modest store footprint – with lower rents – so that it just might remain viable.
uncertain
it → involve → rents
No one needs reminding how tough a job this will be.
asserted
this → need → ?
When the retailer’s payment troubles extended to its landlords last month, the writing was on the wall.
asserted
writing → extend → wall
Department stores globally have been under major pressure from online shopping, smaller and more nimble physical rivals and diminishing foot traffic as more people work from home.
asserted
people → diminish → home
The headwinds have led to financial troubles, closures and bankruptcies across the globe, including at iconic Saks Fifth Avenue in New York.
asserted
headwinds → lead → York
Research from MST Marquee published this week flagged a dozen store closures for David Jones, which would cost thousands of staff their jobs in the lead-up to Christmas.
asserted
which → publish → Christmas
The temptation would be to blame Anchorage Capital, the private equity firm that took the keys to the famous Australian department store more than three years ago.
asserted
that → blame → store
Who can forget the role Anchorage played in selling electronics group Dick Smith to the Australian public in 2013 at a massive profit, just a year after acquiring the business from Woolworths?
asserted
Anchorage → forget → Woolworths
Dick Smith collapsed in 2016.
asserted
Smith → collapse → 2016
The fact that Anchorage paid just $100 million for David Jones in 2023 says plenty about how thin the veneer of viability was already by that stage.
asserted
veneer → pay → stage
Woolworths South Africa had spent $2.1 billion acquiring the struggling retailer in 2014, but its ownership was marred by quick CEO turnover and massive writedowns of a business clearly in decline.
asserted
ownership → spend → decline
More significantly, Woolworths sold off David Jones’s property assets worth hundreds of millions of dollars to help ease the financial pain.
asserted
Woolworths → sell → pain
This included the flagship Sydney and Melbourne stores.
asserted
This → include → stores
What Anchorage acquired for $100 million was a brand name, a turnaround plan and massive lease liabilities for stores that David Jones no longer owned.
asserted
Jones → acquire → that
“The business is positioned as a premium and luxury offering with complementary services across fashion and beauty,” Anchorage said when it sealed the deal in 2023.
asserted
it → position → 2023
David Jones was already implementing plans to spend $250 million on revamping its stores, its loyalty program, digital presence and customer relationship systems to boost sales and better compete with online retailers and luxury brands going direct to consumers.
asserted
Jones → implement → consumers
That revamp was completed late last year, but it was not enough to turn the tide.
asserted
it → complete → tide
Suppliers have been ending exclusive deals with David Jones and defecting to rival Myer.
And the group hit a cash crunch.
asserted
group → end → crunch
By January, suppliers started complaining of delayed payment terms.
asserted
suppliers → complain → terms
In March, David Jones was late paying some suppliers and was pushing them all towards 60-day payment terms
asserted
Jones → pay → terms
In effect, it was using suppliers as a de facto bank, using proceeds from the sale of their goods for extended amounts of time before paying its bills.
asserted
it → use → bills
“We note that recent media commentary is best characterised as misinformed – like many businesses, David Jones is adjusting some operational processes to best position the business for sustainable, long-term growth,” a spokesperson for Anchorage said at the time.
asserted
spokesperson → note → time
When the retailer’s payment troubles extended to its landlords last month, the writing was on the wall for its continued survival.
asserted
writing → extend → survival
There was no way a shrewd operator like Westfield-owner Scentre was going to agree to hand over tens of millions of dollars worth of bank guarantees – designed to protect it from rent default – for shares in the failing department store operator.
asserted
operator → be → operator
These shares will be worthless when Anchorage calls in the administrators.
asserted
Anchorage → call → administrators
The Aporia
