David Jones faces possible winding-up as lender Hilco steps in with extra funding

Australia's 190-year-old department store David Jones is confronting a potential winding-up after breaching a loan covenant with its primary lender, UK-based special situations investor Hilco Global, according to two sources familiar with the matter. Hilco, which had the authority to accelerate the loan, chose instead to inject additional capital last week to allow the retailer to increase stock ahead of the Christmas trading period.

"Hilco has funded above the agreed facility to allow David Jones to increase stock holdings ahead of the busy Christmas trade and sales period. Hilco remains supportive of the business," a Hilco spokesperson said. Private-equity firm Anchorage Capital Partners, which has managed David Jones since 2023, secured Hilco as the main lender in July as part of a turnaround plan. The retailer has reported a pre-tax loss of AUD 95.5 million and an 8.9% drop in sales, while several major fashion brands, including Country Road, Witchery and Mimco, have reduced their floor space, and luxury labels such as Gucci, Chanel and Christian Dior have already scaled back their presence. Stores at Castle Towers in Sydney and Tuggerah on the Central Coast were closed earlier this year. Retail historian Dr. Matthew Bailey of Macquarie University said the chain is under pressure from a mix of short-term and long-term challenges, including competition from online retailers, the rise of shopping centres, the cost-of-living squeeze, higher labour costs and shifting demographics, with younger shoppers favouring online purchases and older customers reducing spending. He told a television program that the store is likely to see fewer and smaller locations in the future. Anchorage Capital Partners has not responded to requests for comment.