David Jones Enters Administration as Suppliers Remove Stock

David Jones, an Australian department store chain with a 188-year history, entered voluntary administration and receivership. Owner Anchorage Capital Partners is considering a bid to take back a slimmed-down version of the business free of current debts and liabilities.

McGrathNicol was appointed as voluntary administrators following board meetings on Wednesday and early Thursday. Hilco Global, the store's main financier, appointed FTI Consulting as receivers.

“If you have a gift card, go now.”

Distributors and brand suppliers of small appliances, consumer electronics, homewares, clothing and luggage were given access to stores by staff and removed their goods rather than wait for administrators to take control of the stock. Many suppliers have been unable to obtain insurance on stock already sitting in David Jones stores.

Staff were briefed at a town hall meeting on Thursday. Chief executive Erica Berchtold said the company had a well-developed plan to reset the business for the future and would work with administrators, receivers and its secured lender.

Customers rushed to spend gift cards after news broke that the retailer's future was in serious jeopardy. At the Highpoint Shopping Centre store in Melbourne's west, some shelves were short of stock while others were due to be cleared by staff.

Shoppers Pauline Ricotta and Sonya said they came to redeem gift cards worth $300 and $450 respectively. Consumer Policy Research Centre chief executive Erin Turner encouraged people with outstanding gift cards to spend them as soon as possible and warned against buying new gift cards.

Anchorage has privately briefed investors that 10 to 15 stores are losing money and that David Jones could be highly profitable once separated from that dead weight. Observers warn the strategy carries major risk, with the brand potentially damaged by months of negative coverage before the collapse.