David Jones is at risk of being sold by Woolworth’s Holdings, after the parent company sustained heavy losses since it purchased the iconic Aussie retail chain in 2014.
As reported by The Australian, the South African-based Woolworths Holdings (which bears no relation to the Australian supermarket chain) has held discussions with investment banks to seek a buyer for the beleaguered David Jones, which has caused billions of dollars in losses for Woolworths, and has already gone through five CEOs in six years.
While a spokesperson for Woolworths told The Australian on Monday there were currently no developments, insiders at David Jones and Woolworths told the masthead a sale was being considered.
This is despite the retailer having impressive profit growth since emerging from the worst of the COVID-19 pandemic, and recently recording its first bottom line net profit since 2018.
It’s understood David Jones also improved its financial standing through property sales, cutting millions in cost, closing its food halls, cutting floor space, and finishing its partnership with BP.
However, it is unlikely the parent company will be able to match the $2.1 billion it initially paid for the high-end retailer in 2014.
Consumer behaviour researcher and retail expert at QUT, Professor Gary Mortimer, told news.com.au high-end retailers like David Jones and Myer are now having to grapple with a retail landscape that has dramatically shifted since the COVID-19 pandemic.
“Certainly over the last decade David Jones has begun reducing its fleet of stores, as have Myer, and they are up against significant growth in online shopping and that has been accelerated as a result of the pandemic,” he said.
“The last annual report of David Jones indicated about 20 per cent of revenue is coming from their online division which suggests maybe more stores would need to close in order for it to be profitable.”
According to The Australian, David Jones’ online sales rose by 44.2 per cent in the recent six-month period.
Meanwhile, David Jones’ up-market rival, Myer, has also bounced back from the pandemic’s dark days.
In September last year, Myer recorded an impressive $46.4 million bottom-line profit, after sustaining heavy losses in 2020.
