David Jones could be in the hands of voluntary administrators within 24 hours after rent talks with Westfield owner Scentre Group broke down on Wednesday, leaving the 188-year-old department store chain with few options and dwindling goodwill among creditors.

The board of David Jones is meeting tonight to decide the retailer’s future, with October and November rent owed to Scentre still unpaid and bank guarantees underpinning its Westfield leases now in play.

A David Jones spokesman confirmed to The Australian on Wednesday afternoon that talks had ended without an agreement.

One industry observer told ChannelNews the retailer had run out of road.

“This is the end. They don’t have the capital or the borrowing capacity to pay rent and operate their stores. Suppliers are walking away or asking for payment upfront,” the observer said.

Anchorage Faces A Second Retail Wipeout

The biggest loser will be David Jones’ private equity owner Anchorage Capital, the group behind the failed Dick Smith chain, which acquired the department store for around $100m from South Africa’s Woolworths Holdings.

With cash and creditor support running out, Anchorage is now expected to appoint voluntary administrators. This is the same group thay pocketed millions from Dick Smith before it was placed into administration.

Scentre Says Its Lifeline Was Rejected

The breakdown follows an unusually frank operational update from Scentre on Wednesday, as the ASX-listed landlord moved to calm investor concerns about exposure to a David Jones collapse.

Chief executive Elliott Rusanow said Scentre had offered David Jones support to retain staff, trade through Christmas and exit some tenancies, but Anchorage turned it down.

Rusanow would not disclose the size or terms of the offer, including whether rent deferrals were on the table, saying only that it was “very generous” and would have helped with cashflow.

He told The Australian the decision on David Jones’ future rested with Anchorage, with which Scentre had been in discussions.

Store Closures Off The Table

David Jones had sought to close up to nine stores in Westfield centres, a plan the landlord appears to have rejected, with outstanding October rent further complicating negotiations.

The chain occupies around 200,000 sq m across Westfield centres, and its collapse would leave a significant hole in the portfolio.

Rusanow said Scentre had been reducing its department store exposure for several years, repurposing that space for better-performing uses, and would treat any David Jones exit as a continuation of that strategy. He added that department stores, particularly Myer and David Jones, still had an important role given the billions of dollars consumers spend in them.

Scentre Holds $45m In Guarantees

In a rare disclosure about a major tenant, Scentre said David Jones had paid all rent up to 30 September.

Scentre holds $45m in bank guarantees from David Jones across its Westfield Australia and New Zealand portfolio, with Scentre’s share around $30m, equivalent to eight months’ gross rent.