No one will be celebrating the collapse of a retailer with the storied history of David Jones.
asserted
one → celebrate → Jones
However, for rival Myer and its billionaire backer, Solomon Lew, it will certainly provide more breathing room as they seek an answer to what is now a very topical question: Do department store operators have a future?
asserted
operators → provide → future
Myer will endure some short-term pain as the corporate undertakers now running David Jones raise money for the cash-strapped group any way they can with massive discounts on any goods the retailer can sell.
asserted
retailer → endure → goods
But Myer’s share price tells the story of who is going to win this round of their ongoing fight.
asserted
who → tell → fight
Its shares were up as much as 9.8 per cent on Thursday, and are up nearly 50 per cent on the September low when it became evident that David Jones’ former private equity owners, Anchorage Capital, were running out of options.
asserted
owners → become → options
The biggest financial relief will come from shopping centres housing both Myer and David Jones stores.
asserted
relief → come → stores
If the nearby David Jones store closes, Myer will pick up a significant share of sales, according to the MST Marquee retail analyst team led by veteran Craig Woolford.
uncertain
Myer → close → Woolford
“Up to half the lost David Jones sales could switch to Myer,” Woolford says.
uncertain
Woolford → lose → Myer
The impatient money driving private equity was no match for the 81-year-old Lew on this front.
asserted
money → drive → front
Private equity (PE) relies on leveraged bets to make outsized financial gains – and multimillion-dollar bonuses – quickly.
asserted
equity → rely → gains
David Jones is what happens when the bet goes wrong.
asserted
bet → happen → ?
Anchorage, as is the PE playbook, tried using other people’s money to wear the risk of the financial engineering involved.
asserted
playbook → try → engineering
Last year, lenders ran out of appetite as the $250 million cost of the David Jones revamp reached its peak.
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cost → run → peak
Lenders only coughed up more cash this month
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Lenders → cough → cash
the situation became so dire that David Jones did not have the cash to buy all-important Christmas stock.
asserted
Jones → become → stock
The group had already wrung every dollar out of its suppliers.
asserted
group → wring → suppliers
They have had their terms of payments stretched so David Jones could make free use of the money it owed them before repaying on terms that extended out to months.
uncertain
that → have → months
It came at the cost of the brand loyalty and exclusivity that underlined David Jones’ image as the upmarket department store.
asserted
that → come → store
The exodus of brands across to rival Myer has been well-documented this year.
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exodus → document → Myer
David Jones has yet to respond to stories of the financial sting for concessionaires who stayed with it.
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who → have → it
Concessions refer to the big brand presence within its department stores.
asserted
Concessions → refer → stores
The stock, staff and floor space are paid for by the brands like Carla Zampatti, Christian Dior, Gucci, and MJ Bale.
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stock → pay → Zampatti
The only thing David Jones does is handle the transaction, extract a fee, and pay the brands.
asserted
Jones → do → brands
Some concession operators say they have not been paid this week.
asserted
they → say → ?
They will now rank as unsecured creditors for these sales while being liable for all the costs.
asserted
They → rank → costs
In the end, a desperate gamble on a deal with David Jones’ landlords was the only thing standing between David Jones and financial oblivion.
asserted
gamble → stand → Jones
Anyone who has dealt with Westfield owner Scentre, David Jones’ largest landlord, would know that these shrewd operators were never going to allow themselves to join the list of parties coming off second best to Anchorage.
asserted
themselves → deal → Anchorage
The only questions now are: How many stores will close?
asserted
stores → close → ?
Will they all stay open for the festive season sales rush?
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they → stay → rush
And we will know soon enough whether a new owner emerges with the vastly reduced network of David Jones stores, and if they have the deep pockets to survive another round with a billionaire with deep pockets and who knows retail down to his fingernails.
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who → know → fingernails
Wouldn’t you want to know what suppliers and landlords think of the news today that Anchorage is interested in bidding for the restructured David Jones business that will emerge from administration with few staff, stores and lower rent.
asserted
that → want → staff
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asserted
newsletter → deliver → stories
The Aporia
