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David Jones nears administration as talks with Scentre collapse
David Jones is expected to enter administration after talks between its owner, Anchorage Capital Partners, and its main landlord, Scentre Group, broke down. The 188-year-old department store chain has suffered steep losses and weak trading, and its future now depends on a process that gives administrators control and puts creditors’ claims in competition.
Scentre says David Jones has not paid rent since September and is in breach of its lease; it says its offer to keep the stores trading was rejected. The retailer has 38 stores and had been seeking lower rents and a smaller network, potentially about one-third of its current size. Administrators may try to keep stores open through Black Friday and Christmas, while analysts point to pressure from discount retailers and luxury brands selling directly to consumers.
In short
- David Jones is expected to enter administration after rent talks failed.
- Its landlord says rent has gone unpaid since September.
- The retailer has been seeking a much smaller store network.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Administration could give David Jones a chance to keep trading while an independent process assesses its debts, stores and prospects. Supporters of restructuring may argue that lower rents and a smaller network could preserve viable shops, jobs and a long-standing retailer, while giving creditors a clearer route to recover some of what they are owed.
The case against
Creditors and landlords may argue that administration is necessary because unpaid rent and steep losses cannot continue indefinitely, and that Scentre should not have to subsidise a retailer’s operations. They may also contend that keeping unviable stores open risks adding to debts and delaying a difficult but orderly resolution.
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Originally published by The Guardian as “David Jones expected to fall into administration after failed 11th hour talks with biggest landlord”.