Half of all David Jones stores set to close as administrators wait for rescue bids

Half of all David Jones’ stores across Australia could be shuttered as administrators chase a white knight to rescue the 188-year-old department chain.

FTI Consulting is expected to tell suppliers later on Wednesday that 19 of the upmarket retailer’s 38 stores will be closed, according to media reports.

David Jones entered administration last Thursday after rescue talks with landlords failed. Hilco appointed FTI as receivers to run the business, while McGrathNicol seeks a buyer or fresh capital.

It was revealed that David Jones was sounding out restructuring plans nearly four months before it was handed over to administrators and receivers.

The retailer had wanted to keep 12 stores open at full rent, while seven others would remain open if offered rent relief, according to the Australian Financial Review. The other 19 stores would have closed.

Separate media report suggests the collapsed retailer could be sold back to private equity firm Anchorage Capital Partners.

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.

David Jones boss Erica 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 analysis of limited financial information relating to David Jones.

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.

David Jones family mourns ‘race to the bottom’

A member of the family that set up the department store believes there’s still room for the personal touch and carefully crafted in-store experiences.

Charles Edward Lloyd Jones was a fifth-generation member of the founding family to work in the business, and the last.

He left in 1993 after finishing up as store manager at David Jones Chatswood on Sydney’s lower north shore, and similar stints at stores at Bankstown in the west and Bondi Junction in the east.

“If you don’t have a unique offer, then it’s a race to the bottom with price,” the 68-year-old said.

“And then if it’s a race to the bottom with price, people start cutting staff and when they start cutting staff the service diminishes.”

Asked if he had circled David Jones looking for someone to ring up his purchase, Mr Lloyd Jones said: “Too many times.”

Mr Lloyd Jones suggests any new owner will have to cut its square footage and store numbers, and have as unique an offering as they can “because otherwise you’re just going to be in the same situation in another three to five years”.

Management also needs to “get out from behind the desk” and get on the store floors to see first-hand how customers and staff are engaging.

David Jones has up to 6000 staff.

Mr Lloyd Jones has been out of the old family business for about 30 years, so he looks on what’s happening now with a sense of disconnection.

“But if I was working there I would be shattered ... and I can understand their anxiety,” he added.

“I’m still in touch with a huge number of people I worked with - I was there in the golden era of department stores and then, from a personal family point of view.

“So I think caring about the community, which is your staff and customers and your suppliers, is paramount.”