David Jones is on the cusp of being sold to Anchorage Capital for a mere fraction of what its South African owners bought it for.
The 184-year-old department store will change hands for between $125 million and 150 million – ten times its FY22 earnings.
Not included in the sale, however, is the retailer’s flagship Bourke Street property, arguably worth more than the entire David Jones business.
Woolworths Holdings were initially looking for a sale price of $250 million, including the Bourke Street store.
As it stands, they will have to sell that separately, in a bid to recoup as much of its $2.1 billion investment in the Australian retailer market. (That $2.1b sale price included the Country Road group of stores, which Woolworths has also kept hold of.)
David Jones trawled through five CEOs over six years, and endured three years of straight losses, which only ended last year due to a 70.4 million JobKeeper handout.
It embarked upon a disastrous and mismatched dual-branding exercise with BP service stations, shut the majority of its food halls, and trimmed overall floor space by 7 per cent across the 40 stores.
The company has attempted to claw back its sunken investment costs to shedding assets. It offloaded the flagship Sydney CBD Elizabeth St building for $510 million, and the menswear stores in its Bourke St building, in the Melbourne CBD, for $121 million.
Woolworths Holdings CEO Roy Bagattini first confirmed his plans to sell during the company’s annual report, issued in August.
“Whilst we will continue to refine our strategies, our focus is now primarily on execution, and we have already made demonstrable progress in this regard over the past year,” he wrote.
“David Jones is now debt free, self-funding, and has a clear road map to improving profitability, and as such, we are in a favourable position to explore all future options in respect of this business, and how best to further unlock value for the group and our shareholders.”
