David Jones to Close 19 of Its 38 Stores, Putting Thousands of Jobs at Risk

The receivers of Australian department store chain David Jones said Wednesday that they will close 19 of its 38 stores, according to The Guardian and ABC News. The closures put many of the retailer's more than 6,000 employees at risk of losing their jobs, The Guardian reported.

The company fell into voluntary administration less than a week ago, and the closures are part of what receivers FTI Consulting called an urgent restructure.

The key numbers

• 19 of 38 stores: half the network is set to close, according to the receivers.
• More than 6,000 staff: The Guardian reported that this is how many people David Jones employs across its stores.
• 188 years: the age of the department store chain, which both outlets described as having collapsed into administration.
• Five stores: ABC News reported that five outlets in Westfield shopping centers had already been flagged for closure because they were losing money, including Parramatta, Hornsby, Woden in Canberra, Carousel in Perth and Southland in Melbourne.
• Since September: Scentre Group, the owner of Westfield, confirmed David Jones had not paid rent since then, ABC News reported.

What is closing and when

The Guardian published a list of the 19 stores, which includes sites in New South Wales, Victoria, Western Australia, Queensland, South Australia and the Australian Capital Territory, as well as one in New Zealand. Among them are Parramatta, Macquarie Centre, Highpoint, Robina Town Centre and Sunshine Plaza. ABC News reported that the affected sites include one in Parramatta, three in Victoria, and sites on the Gold Coast and Sunshine Coast.

FTI said the stores will keep trading for now and that it expects them to stop trading by the end of the year, with no final closure dates set. A letter to suppliers seen by ABC said the stores are expected to trade through the peak seasonal period. Stock at closing stores will be discounted or moved to other locations.

What it means for staff and suppliers

FTI said it has started an immediate consultation process for all staff tied to the 19 closing stores. In a message to employees obtained by ABC, chief executive Erica Berchtold said the store portfolio was no longer the right shape for the business.

Creditors have until Monday to submit proof of debt, ahead of a first creditors meeting on Tuesday that will be held remotely, ABC News reported. The call is likely to bring forward thousands of claims from businesses ranging from fashion brands to major landlords. The Guardian reported that some small suppliers are owed money for stock sent in April, before David Jones missed rent payments. ABC also confirmed the company was up to date with superannuation payments to its employees.

What this means for a possible sale

Under a dual appointment, FTI runs day-to-day operations on behalf of the main secured lender, Hilco, while administrators McGrathNicol look for a buyer or new capital. ABC News reported that there are only days left for others to lodge expressions of interest, and that McGrathNicol intends to ask the NSW Supreme Court to extend the convening period to allow more time for a sale or recapitalization.

The Guardian reported that the private equity owner, Anchorage Capital, has long wanted a slimmed-down David Jones free from long-term leases on underperforming sites and is expected to propose buying it back. Retail analyst Tom Kierath of Barrenjoey told ABC that buyers would likely be eyeing a smaller footprint and a handful of sites, possibly with a bigger food and drink offering.

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Around Prague, based on reporting by ABC News (Australia), The Guardian

Cover photo: Yu Chu Chin / Wikimedia Commons, CC BY-SA 4.0, cropped