After 188 years of operation, the final nail in the coffin that hammered David Jones into collapse was a month of late rent.
asserted
that → hammer → rent
Last Friday, in a meeting room on the 30th level of Westfield Sydney, and directly across the road from David Jones’ Elizabeth Street flagship, representatives from Westfield operator Scentre Group and David Jones sat down for a meeting that would be their last as a group.
asserted
that → sit → group
By this point, David Jones’ board of directors had held several weeks of talks with its biggest landlords about the terms of a restructuring deal that would save the department store chain from rapidly running out of cash.
asserted
that → hold → cash
Everyone was in agreement that the incredibly unprofitable network of 38 stores drastically needed to downsize.
asserted
network → need → stores
Chief executive Erica Berchtold had put together a plan that proposed keeping 12 stores, negotiating the terms for seven stores, and exiting 19.
asserted
that → put → 19
Gnarly details to be hashed out included rental holidays and $74 million in bank guarantees, a safety net for landlords to get a cheque from the bank in case a tenant falls into arrears.
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tenant → hash → arrears
Scentre Group alone holds $30 million in this way, funds that Berchtold wanted to unlock.
asserted
Berchtold → hold → that
Those talks continued, but became increasingly fractured.
asserted
talks → continue → ?
David Jones fell behind on rent for the month, a sum of about $5 million.
asserted
Jones → fall → million
Scentre had proposed a deal that offered to defer rent for November, December and January, and to reduce future lease commitments by closing stores across 2027, but wanted October’s rent paid in 2027.
asserted
rent → propose → 2027
David Jones’ directors tried to leverage its unpaid rent as part of a broader restructuring deal.
asserted
directors → try → deal
But Scentre wanted the outstanding rent paid as a gesture of good faith before discussing the other terms.
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rent → want → terms
“At the end of the day, the sticking point was: the company was behind in rent,” said a source close to negotiations but not authorised to speak publicly.
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source → say → negotiations
“[Scentre] wanted outstanding rent to be paid to continue with negotiations.”
asserted
rent → want → negotiations
After the meeting, the directors of David Jones put forward a final proposal that offered to pay the rent if it could secure a commitment on the broader restructure – a rent holiday, a release of bank guarantees, and store closures.
uncertain
it → put → guarantees
But on Sunday November 1, David Jones missed another rent deadline.
asserted
Jones → miss → deadline
By Wednesday, Scentre had learned David Jones had paid other landlords.
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Jones → learn → landlords
Scentre took it as a rejection of its proposal.
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Scentre → take → proposal
The talks ended there.
asserted
talks → end → ?
That day, Scentre issued a statement to the ASX that revealed David Jones was already paying much less rent than other retailers – $352 per square metre compared to an average of $942 per square metre for all stores in its portfolio – and that David Jones had not paid rent after September.
asserted
Jones → issue → September
The rest of the drama played out in the media.
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rest → play → media
“We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading,” Scentre Group chief executive Elliott Rusanow said in a statement.
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Rusanow → make → statement
“That offer has disappointingly been rejected by them.”
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offer → reject → them
On Wednesday evening, Berchtold, Anchorage Capital executive chairman Phillip Cave, and managing Partner Simon Woodhouse held a board meeting.
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Berchtold → hold → meeting
The next morning, what had seemed inconceivable to thousands of Australians was confirmed: David Jones had been placed into the hands of administrators, who are now seeking a white knight saviour.
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who → seem → saviour
Receivers and managers were appointed by British lender, Hilco.
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Receivers → appoint → lender
The unceremonious downfall of what was once Australia’s most glamorous department store was the culmination of several months’ effort to downsize its footprint of 38 stores.
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what → downsize → stores
Berchtold had been installed as chief executive at the expense of Scott Fyfe, who had led David Jones since the beginning of 2017, years before Anchorage Capital bought the business in December 2022 for less than 5 per cent of what David Jones’ previous owner, Woolworths Holdings, paid for it.
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owner → instal → it
Fyfe’s plan to transform David Jones involved pouring $250 million into store refurbishments, upgrading digital infrastructure, and selling digital ads to luxury brands.
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plan → transform → brands
$22 million alone had been committed to upgrading Westfield Bondi Junction.
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million → commit → Junction
Anchorage didn’t want to spend more money on the business.
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Anchorage → want → business
In his final months, Fyfe was looking for a cash injection by seeking an additional investor or another equity partner.
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Fyfe → look → investor
Spotlight Group is reportedly among one of the potentially interested buyers, but ultimately, none put their hand up, put off by the onerous liabilities off the loss-making department store chain.
uncertain
none → put → chain
Berchtold, former chief executive of The Iconic and freshly out of the top job at Mosaic Brands, joined David Jones as chief commercial officer in circumstances that share some uncomfortable parallels: Mosaic was backed by the same lender, Hilco, and she had sought to renegotiate terms with suppliers before it was handed over to administrators.
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it → join → administrators
Berchtold had a more aggressive approach: injecting cash was a short-term fix, but not a long-term plan for profitability.
asserted
injecting → have → profitability
Ultimately, Anchorage decided to back her as chief executive, and made her so on June 22, effective immediately.
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her → decide → June
A David Jones media statement described it as a “planned leadership transition” and contained quotes from Fyfe that said his tenure was concluding by “mutual agreement”.
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tenure → describe → agreement
Fyfe is now suing David Jones for corporate oppression.
asserted
Fyfe → sue → oppression
Fyfe (and his family trust and super fund) are minority shareholders in David Jones, and are accusing Anchorage Capital of running the business in an “oppressive, unfairly prejudicial, or unfairly discriminatory” way that dilutes the value of his stake.
asserted
that → accuse → stake
Fyfe is asking the Supreme Court of Victoria to force Anchorage to buy out his shares at the price he paid for them, or at a “fair value”, and to force the business to open up its financial records for him to inspect.
asserted
him → ask → records
…and 11 more, not listed.
The Aporia
