Australia's oldest department store David Jones facing financial collapse after 188 years
After nearly 200 years in business, the iconic Australian retailer is reportedly on the verge of collapse as major luxury brands flee and suppliers go unpaid.
The future of the nation’s oldest department store, David Jones, is under a cloud with store closures being floated to save the retail empire from extinction.
After 188 years in business, the chain is reportedly on the verge of collapse and looking for a financial saviour with deep pockets, according to The Australian.
WATCH THE VIDEO ABOVE: David Jones faces collapse after 188 years
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“Erica Berchtold’s priority is to accelerate the execution of the business’s INSPIRE30 strategy and is in advanced discussions with key stakeholders about how David Jones is adapting to the ever-changing retailing landscape,” the spokeswoman said.
It has been reported the luxury retailer has struggled to pay some suppliers and has lost major brands, including Christian Dior, Gucci and Chanel.
Berchtold was only appointed in June to take the reins of the company with the aim to sharpen cost efficiency and capability.
At the time David Jones also announced their refinancing partnership with lending facility Hilco.
What the experts say
Trading conditions are currently dire, with Aussie shoppers tightening their purse strings amid rising interest rates and petrol price surges.
Business strategist and consumer behaviour analyst Barry Urquhart warned the situation was critical.
“A boom Christmas trading period will not be a saving grace for David Jones. It will simply delay the inevitable,” the retail expert told 7NEWS.
“David Jones cannot trade out of this situation. The issue is fundamentally capital inadequacy. It is about cash flow, or in short, bottom line, liquidity. Without liquidity, you’re sunk.”
Associate Professor Carol Tan from RMIT University believed the store’s history alone wouldn’t be enough to save it, but said the retail giant could still be saved if it opted to downgrade operations and close a number of stores.
“It’s got legacy, it’s got heritage, but as we can see, heritage is no longer enough,” she said.
“I am confident that it can be saved, not in the way that they sell right now, but maybe less stores.”
The department store has survived two world wars and the Great Depression, and long-time shoppers hope it can survive this current crisis.
Retail property giant Vicinity has reported department store sales are especially slumping, down 6.5 per cent in the past three months alone.
The department store operates 38 outlets across Australia and New Zealand and is believed to employ more than 5000 workers.
Originally published on 7NEWS
