The majority shareholder in the parent company of David Jones has called its $2.1b acquisition of the retail giant a poor investment while supporting its plan to shut its stores.
Last week B&T reported David Jones sales in its stores had fallen 35.8 per cent across March and April, with the company closing and selling some of its 48 locations around the country to reduce the debt pile.
And now, ivestment management company Allan Gray, which last month piled up 20 per cent of South African-based Woolworths Holdings, told The Sydney Morning Herald: “Woolworths paid $2.1 billion for David Jones which has turned out to be a very poor acquisition given the pressure department stores find themselves under globally and the tough Australian economy,” Allan Gray portfolio manager and director Duncan Artus said.
“Most of the value is in the South African operations, including an excellent food business, and Country Road, which operates in both Australia and South Africa.”
David Jones’ South African-based parent company Woolworths Holdings alerted investors of the upcoming changes two weeks ago.
“COVID-19 has had a significant impact on (customer) foot traffic and store sales,” the company said.
“We expect the challenging and fluid operating environment brought about by the pandemic, to continue for the foreseeable future.
“In these unprecedented times, the Board and management team will continue to act swiftly and decisively to protect the Group’s financial position.”
The group has now brought on investment bank UBS to review a restructure as the company attempts to reduce around $500m in debt owed by David Jones and Country Road Group.
