David Jones owners seek deal with landlords and suppliers ahead of Christmas
Private equity owner Anchorage Capital and lender Hilco Capital are negotiating funding and possible store closures to secure the department store's future beyond the holiday season.
The owners of David Jones are in urgent talks with landlords and suppliers to decide the department store's outlook beyond this Christmas. The negotiations are part of Anchorage Capital's effort to stabilise the upmarket retailer, which has been facing cash-flow pressures as cost-of-living constraints limit consumer spending.
Hilco Capital, a lender and distressed-business investor, confirmed it has provided additional funding to help David Jones stock up for the crucial Christmas trade, which typically generates about two-thirds of annual profits.
"Hilco Capital has funded above the agreed facility to allow David Jones to increase stock holdings ahead of the busy Christmas trade and sales period," a spokesperson said. "Hilco remains supportive of the business, and any inference otherwise is false."
An Anchorage Capital spokesperson said directors are in "intense" discussions to reach a decision by Christmas on the long-term size and structure of the business, noting that closures could be part of the outcome. The cash injection will be used to pay commercial rent on the chain's 40 stores, settle supplier invoices and enable the company to draw down on loan facilities linked to inventory.
David Jones has breached a minor covenant, giving Hilco the right to take control, though Anchorage Capital denied reports that restructuring adviser McGrathNicol had been appointed. Recent months have seen several luxury and designer brands, including Effie Kats, Acler, Significant Other, Aston Studio and R. M. Williams, move their concessions to rival Myer. LVMH-owned Dior, Gucci and Chanel have also withdrawn some lines, and Country Road Group has cut nearly 100 of its 283 concession stores within David Jones.
Erica Berchtold, appointed as the retailer's first female chief executive in late June, is leading the turnaround effort. The company has recorded losses of AUD 95.5 million for the year to June 29, widening the AUD 74.1 million loss reported the previous year.
Online shoppers on Reddit are urging each other to use any remaining David Jones gift cards promptly.
The challenges facing David Jones reflect a broader trend of department stores worldwide struggling to adapt to changing consumer habits, with many shoppers favouring standalone brands and online channels.