David Jones Appoints Administrators as Unpaid Rent Triggers Retail Collapse

Australian department store chain David Jones entered voluntary administration on Thursday after negotiations with its main landlord broke down, putting 6,000 retail jobs at risk.

The 188-year-old retailer appointed restructuring firm McGrathNicol as voluntary administrators, while lender-appointed receivers FTI Consulting assumed day-to-day control of operations.

The collapse follows months of financial pressure and unpaid rent that left the department store chain in breach of its lease contracts across 17 shopping centres.

"We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading and that offer has disappointingly been rejected by them," said Elliott Rusanow, the chief executive of landlord Scentre Group.

Scentre Group reported that David Jones had failed to pay rent since September, despite landlord guarantees providing up to eight months of rent coverage.

"David Jones is an iconic company and so many Australians have stories and memories of visiting DJ's stores," said Erica Berchtold, the chief executive of David Jones.

Berchtold added that the retailer has "a well-developed plan on how to reset the business for the future."

According to The Age, designer brands including Gucci, Yves Saint Laurent, Scanlan Theodore and Oroton began removing stock from flagship stores in Sydney and Melbourne on Thursday as staff packed inventory into boxes.

The reports contained conflicting figures on the retailer's store network, with ABC News reporting 43 stores across Australia and New Zealand, while 1News, The Age, The Guardian and the BBC reported 38 physical stores remaining.

"We understand the current retail trading environment, rising costs, a significant and outdated retail footprint, and supply chain challenges have led to this point," said Christopher Hill, a receiver at FTI Consulting.

Hill said the dual appointment of administrators and receivers would provide breathing space to restructure the business while attempting to keep core stores open.

Private equity firm Anchorage Capital Partners purchased David Jones in 2022 for AU$100 million from South African parent company Woolworths Holdings, which had paid $2.1 billion for the chain in 2014.

Australian Opposition Leader Angus Taylor blamed government economic management for the collapse, while Assistant Employment Minister Patrick Gorman dismissed the comments as political point-scoring.

Receivers from FTI Consulting will now run a sale process for the company while reviewing operations and determining potential store closures.