Is David Jones Canvassing A Sale? Hong Kong Bankers Say “Yes”.
Back in 2014 David Jones was purchased by the South African Woolworths Group for $2.1 Billion today the Company is up for sale according to investment bankers in Hong Kong who have said that the Company today is worth “no more than between “$400 and $500M”.
During a visit to Asia this week, an investment banker asked me questions regarding the Australian retail market, he said that David Jones who have recently expanded their range of premium audio and consumer electronic goods is “up for sale”.
According to the Australian newspaper Woolworths is set to write down the value of David Jones by $400 million if not this year early in 2020, after writing down the business by $700 million 13 months ago.
Woolworths management have denied that they plan to exit from the Australian market.
Another source said Woolworths would be satisfied remaining in the Australian market because its offshore assets provided a natural currency hedge.
ChannelNews understands that the Company who also own Country Road, Mimco, Witchery, Politix and Trenery brands are facing headwinds on several fronts similar to Myer.
Earlier this year David Jones CEO David Thomas quit the Company.
A big problem for David Jones is that they are facing tough competition from online operators and their own website has struggled for several year.
After a fallout with Fujitsu the Company turned to IBM but even that move has not delivered them “real momentum” online claim insiders.
12 months ago, the value of David Jones was written down by about $700m, taking its book value to $1.4bn, the Australian claims that with Myer’s market value at $566m, Woolworths auditors would no doubt be adding pressure on the group to write down the assets’ value.
Most US-based department stores have written down their value or been bought by rivals, while in Britain, department store Debenhams fell into administration after billionaire Mike Ashley, of Sports Direct, offered to rescue the business that needed a £200m (365) lifeline from its lenders.
Both Myer and David Jones generate about a third of their revenue from flagship Melbourne and Sydney stores, and the widely held view is that the groups need to exit non-performing stores to boost profitability — a move that is challenging due to their long-term shopping centre lease liabilities.
The move will impact several high-profile audio and consumer brands such as Loewe, Bose, Bang & Olufsen, Naim and Sony who rely on the David Jones stores to generate sales.