David Jones’ flagship Perth store in Hay Street Mall is one of three in the city to close as administrators work to keep the 188-year-old retailer alive.
The CBD store — which owed $1.5 million in rent — as well as Garden City and Carousel, will be closed, receivers FTI Consulting on Wednesday said, with fears hundreds of jobs will go. They are among 19 of David Jones’ 38 stores set to be shuttered.
There are now talks the David Jones Hay Street could be divided into smaller stores. Despite fully-stocked shelves at the Perth store, there were very few shoppers browsing on Wednesday afternoon.
While there is no final date for the closures, FTI anticipates all stores earmarked to close will stop trading by the end of the year.
Less than a week after David Jones collapsed into administration last Thursday, FTI said it had made the “difficult decision to proceed with an urgent restructure of the business”, in line with the plan for a leaner operation put forward before it failed.
“As part of this restructure, the receivers have commenced an immediate consultation process for all staff associated with 19 stores that have been identified for closure,” the receivers said.
“For the immediate term these stores will continue trading, and while there is no final date for the closures, we anticipate they will cease trading by the end of the year.
“David Jones staff have been informed today, with the consultation period continuing over the next seven days.”
A David Jones sales assistant in Perth told The West Australian she found out about the closure through workplace app Yoobic.
“The staff working in my store today were not informed by store management,” she said.
“Many people were very upset and angry. My colleague told me all managers in our store had been in meetings all morning — so not even on the selling floor to support staff.
“Safe to say we are all very, very disappointed with the lack of respect for staff in allowing us to find out this way.”
In a memo to staff, seen by The West, David Jones chief executive Erica Berchtold said the business could not continue operating as it was.
“We had a plan to reset the business, and we still have a plan to reset the business,” she said.
“Put simply, our store portfolio is no longer the right shape for the business, and this change is about creating a network that is financially sustainable for the future.”
Ms Berchtold said administrators had commenced a consultation period with affected staff and were “working through what this means for their employment”.
“I know how much our stores and the people in them mean to all of us, and this is difficult news for our whole business,” Ms Berchtold said.
“We will explore redeployment opportunities wherever we can, where there are vacancies available in our wider network.”
She said some stock at the closing stores would be placed on discount, while key products will be reallocated to other stores.
FTI said it recognised the restructure would have “a material impact” on staff.
“Whilst the impacts are highly regrettable, the receivers believe the steps are unavoidable if David Jones is to continue as a viable business and these measures will help give David Jones the best chance for a sustainable future,” they said.
The receivers did not provide an expected number of job losses for the retailer, which currently employs 6000 people, including about 650 in WA.
David Jones’ other stores in WA, Karrinyup and Claremont, are set to remain open for now.
Perth is the only city to lose its flagship store. It marks the second major retailer to exit Hay Street mall following the closure of Pottery Barn and West Elm.
David Jones marked its return to WA in late 1999 after acquiring the Hay Street store from Aherns, the last family-owned department store chain in Australia. The renovated city store, which doubled in size, opened in 2002.
Veteran WA marketing and retail analyst Barry Urquhart doesn’t expect a noticeable difference from David Jones’ exit from the city.
“David Jones’ Perth store was simply an upgraded, second-ranked former Ahern’s store and it wasn’t a full-serviced, full-sized department store,” he said.
“It wasn’t the magnet, it wasn’t the attraction and point of difference that attracted people in to the CBD.”
But one pair of dedicated shoppers were willing to drive more than three hours from Busselton to have one last look at David Jones Hay Street.
While choosing to remain anonymous, one of the Busselton pair called the iconic store’s downfall the final “nail in the coffin” for the already-struggling mall.
Of the few customers at the Hay Street store, many were hunting for bargains, leaving disappointed after finding most items remained full-price.
University student Kerol Cristina, has fond memories of David Jones. She recalled the excitement of her very first visit to the department store when hunting for high-end cosmetics.
“I remember my first time coming I was looking for Fenty Beauty products and I found them here and I was so happy,” she said.
“I loved David Jones because you could try makeup on, that was the best part. I loved window shopping and admiring the nice products.
“It’s such a nice place to spend time and browse, so it’s really sad that it’s closed. I study in the city, so now I’ll need to find other shops to buy my products.”
The last day of trade for affected stores is yet to be confirmed. With Black Friday sales just weeks away, David Jones expects affected stores to continue trading through the peak period.
Shop, Distributive and Allied Employees’ Association vice-president Bernie Smith said it was a “sad and stressful day” for all David Jones workers.
“No one should forget that their plight is entirely the fault of bad management decisions and initiatives going back years, if not decades,” he said.
“For many long-termers their jobs with DJs have been a matter of pride if not love. And this is how that loyalty is repaid.”
It was revealed on Tuesday that David Jones was sounding out restructuring plans nearly four months before it was handed over to administrators and receivers last week.
The retailer had wanted to keep 12 stores open at full rent, while seven others would remain open if offered rent relief. The other 19 stores would have closed.
Nine sites that are now to be closed are at Westfield shopping centres owned by ASX-listed Scentre Group, with others in malls owned by GPT, Stockland and Vicinity Centres.
Singapore-based Starhill Global REIT owns David Jones’ Hay Street building.
Scentre chief executive Elliott Rusanow on Wednesday noted the business was “practically full”, with occupancy at 99.8 per cent and “strong demand for space”.
“We have a unique opportunity at 17 Westfield destinations to introduce and grow local and international brands and experiences that our customers want,” he said.
“We will continue to pursue this strategy.”
A spokeswoman for GPT said it had been proactively reinvesting in and evolving spaces across its malls as part of a broader retail strategy.
Vicinity boss Peter Huddle last week told The West it had “plans in the event that there is no David Jones”.
Asked if Vicinity would be disadvantaged if David Jones closed stores within its malls, Mr Huddle said: “For Australia I think losing David Jones is a loss, but for us . . . we’re not overly concerned”.
“We know we have some very good real estate that will be in demand for David Jones or for whoever might be interested in that business,” he said.
Early talks failed to save DJs
In bombshell revelations that came to light in documents published late on Tuesday, creditors were told a meeting was held on July 27 between administrators McGrathNicol, representatives of David Jones’ owner Anchorage Capital Partners, including David Jones group director Simon Woodhouse, and lender Hilco Capital to discuss the retailer’s financial performance and potential restructuring scenarios.
Yet there was no further engagement until late October.
Ms Berchtold did not meet with McGrathNicol until October 28, when contingency planning took place.
On November 4, a day before David Jones’ collapse, Mr Woodhouse spoke to administrator Shaun Fraser on two occasions, when he requested McGrathNicol to provide draft appointment documents for a board meeting the following morning.
But the documents also revealed Anchorage was alert to the possibility of David Jones’ collapse as early April, when McGrathNicol was engaged by law firm Corrs Chambers Westgarth — acting on the behalf of Anchorage — to review and analyse limited financial information relating to David Jones.
FTI earlier this week said sales and customer traffic have hit record levels since David Jones collapsed, even as fashion brands strip stock from stores and suppliers hold back deliveries.
But it provided no sales figures or comparison period to substantiate the record claim.
Australian and overseas suitors are now circling David Jones, with the administrators setting a Friday deadline for expressions of interest.
The first creditors’ meeting will be held next Tuesday. Administrators said they would seek additional time to pursue a sale or recapitalisation, with a key second meeting to decide on David Jones’ future potentially pushed back by three months.
The full list of store closures:
- Carousel, WA
- Garden City, WA
- Hay Street Mall, WA
- Glen Waverley, VIC
- Green Hills, NSW
- Highpoint, VIC
- Hornsby, NSW
- Macarthur Square, NSW
- Macquarie Centre, NSW
- Malvern Central, VIC
- Marion, SA
- Newmarket, NZ
- Parramatta, NSW
- Robina Town Centre, QLD
- Sunshine Plaza, QLD
- Warringah Mall, NSW
- West Lakes, SA
- Woden, ACT
- Wollongong Central, NSW
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