The David Jones administration began on Thursday, when Australia’s 188-year-old department store chain was placed into voluntary administration. Rising costs, sluggish retail sales and supply chain pressures all weighed on the business. Founded in Sydney in 1838 by Welsh immigrant David Jones, the retailer describes itself as the world’s oldest continuously operating department store.
What happened
McGrathNicol was appointed as voluntary administrator. On the same day, lender Hilco appointed receivers and managers from FTI Consulting to protect its loans. Voluntary administration is Australia’s closest equivalent to Chapter 11 bankruptcy in the United States. Stores, both physical and online, continue to trade under the control of the receivers while they review operations. That dual structure of administration and receivership makes the David Jones administration more complicated than a standard restructuring.
Rent talks with Westfield broke down
The collapse followed failed negotiations with key landlord Westfield. Its owner, Scentre Group, told the market that David Jones had paid rent only up to September 30. ABC News, citing Scentre’s chief executive, reported that the landlord offered a lifeline that was rejected by David Jones’s owner, Anchorage Capital. The chain has stores at 17 Westfield locations, so the dispute reached deep into its footprint.
Jobs, unions and likely closures
About 6,000 staff work across 38 stores. In a letter to employees, the receivers said staff would continue to be paid normally, though they are reviewing unpaid entitlements. They also said steps to shrink the retail footprint are likely in the near term, with staff and unions to be consulted. Five Westfield stores have already been mooted for closure because they lose money:
- Carousel in Perth
- Parramatta
- Hornsby
- Woden in Canberra
- Southland in Melbourne
The retail workers’ union, the SDA, said its focus is keeping as many people employed as possible and protecting entitlements for anyone made redundant. It also welcomed the federal government’s payday super reforms, which it says will limit unpaid superannuation losses when a company fails. For workers, the David Jones administration is above all a question of how many stores survive.
Why the retailer collapsed
Receiver Christopher Hill pointed to a tough trading environment, rising costs, an outdated and oversized store network, and supply chain problems. The Australian Chamber of Commerce and Industry said retailers across the country are seeing costs rise faster than they can absorb. Retail analyst Matthew Bailey of Macquarie University argued the trouble was long in the making: department stores cut customer service to compete on price, which undermined their own business model.
Lender and landlord respond
Hilco said the directors and Anchorage had been unsuccessful in their negotiations, and promised to keep supporting trading while the business is recapitalised and new owners are found. Charter Hall Long Wale REIT, which owns half of the flagship Elizabeth Street store in Sydney, said it was assessing the implications. That property contributes about 4 per cent of its net property income, and it holds a bank guarantee equal to roughly 12 months’ rent. It made no change to its FY27 guidance after the David Jones administration.
What happens next
Reuters reported the retailer now faces a sale. Bailey said its future depends on whether a buyer is willing to take on the risk of an ageing business model in a declining sector. He expects fewer stores, with outer-metropolitan sites most likely to go and upmarket offerings concentrated in wealthier areas. For shoppers, stores are still open, but the David Jones administration will shape what the brand looks like by next year.
The coming weeks will show how many stores and jobs survive. Until then, the David Jones administration leaves one of Australia’s best-known retail names facing its most uncertain Christmas.
