All Eyes On JB Hi Fi As David Jones Value Slashed By $437M
As we tipped back in May department store retailer David Jones has slashed the value of their business by $437M with the Company declaring that retail is in a ‘recession’ some experts are tipping that Myer will also announce a dire balance sheet restructuring.
Owned by South Africa’s Woolworths Holdings, the Company has not said whether they are trying to sell the David Jones business to Asian investors.
What they have claimed is that their business is under “unprecedented economic pressures”, with more than $1.1 billion in value slashed from their books.
During the past 18 months the Company has been progressively expanding their consumer electronics business primarily with brands that the mass CE retailers are not stocking however the Company refuses to say what success they are having in this category after already dropping several premium brands due to poor sales.
ChannelNews understands that several of the new brands that were introduced in the CE section were on consignment.
David Jones was valued at $2.1 billion when it was bought in 2014 that value has slipped to $965m with analysts tipping that department store rival Myer — might soon follow with their own dire warnings and revaluations.
Woolworths Holdings management said “This write down reflects sustained and unprecedented economic pressures and structural changes in the Australian market. The retail sector in Australia is currently in recession and the Australian economy has slowed to its weakest level since the Global Financial Crisis in 2009,”.
“Operationally, our strategic initiatives position David Jones for the retail environment of the future. Our digital and online offering is expanding rapidly. We remain focused on reducing costs and reducing store space across our footprint,’’ a Woolworths Holdings spokesman said.
“The Elizabeth Street Flagship store refurbishment is on track, with key womenswear floors opening this month, and the exclusivity of our Country Road Group brands within David Jones will take effect from September adding to the extensive collection of new, exclusive brands signed to David Jones this year, in line with our focus on delivering an exclusive offering. These initiatives align us closely with the changing needs and preferences of our customers.”
David Jones said that the recent fall in interest rates and cash handouts from the federal government’s promised tax cuts they have failed to materialise for the big retailer.
All eyes will now turn to key retailers such as JB Hi Fi who report shortly and Harvey Norman to provide a greater analysis of the consumer electronics retail sector.