The labels David Jones have asked to buy back unwanted clothes

Department store giant David Jones has made the unprecedented move to ask its designers to buy back clothes that haven’t sold in a bid to ­recoup costs.

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Department store giant David Jones has made the unprecedented move to ask its designers to buy back clothes that haven’t sold in a bid to ­recoup costs.

The Sunday Telegraph understands brands including by Johnny, ­Ellery, Lee Matthews and Christopher Esber are among a slew of designers being requested to buy back product which has sat unsold on the shop floor.

The moves comes after the South African-owned company reported a notable 39 per cent drop in half-year profit to $36 million and follows the resignation of chief executive, David Thomas in February — the retailer’s fourth CEO in five years.

David Jones has made an unprecedented move, asking designers who supply them clothes to buy back stock that isn’t sold. Picture: Matt Loxton

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“This is a new thing David Jones are doing,” one insider said. “They have been unofficially and casually asking brands to buy back stock which hasn’t sold for a little while now, however they have recently ramped it up and are calling official meetings.

“I have to say, it’s not completely unusual in global practice to have a contract with designers which stipulates this would be the case.

“It’s called a guaranteed sell through agreement to ensure they aren’t stuck with stock if the product doesn’t do well. However, David Jones has never done this before.”

The department store made the move in a bid to recoup costs. Picture: AAP Image/Brenton Edwards

Another well-placed source said: “What would ordinarily happen is the department store would hold on to excess stock and then put it on sale.

“And if it doesn’t sell then they would move it around the country until it is purchased.

“Asking an Australian label to buy back stock is not financially viable. It is a tough time for retailers.”

David Jones’ sluggish discretionary spending results come as the department store is gutting its flagship precinct in Sydney’s Elizabeth St as part of a $200 million makeover in a bid to regain its position as Australia’s “home of luxury shopping”.

However, according to brands stocked within the store, the luxury market ambitions sit strangely with a reality of constant discounting/

David Jones reported a half-year drop of 39 per cent, which followed the resignation of CEO David Thomas. Picture: John Grainger

“The new owners need to figure out what their business model is,” one designer said.

“At the moment their business model is low price.

“They have designer fashion and designer brands from all over the world, but all you see when you walk through the doors is a sea of red. There are just sale signs everywhere. What is unusual about what they are doing at the moment, more so than making designers buy back stock, is this constant mark down mentality.

“The only way they think they can sell something is it put it on sale. If you are in the low price, high promotion business, like Target, Big W, K Mart, sales are normal, that’s their model. But department stores aren’t meant to work like that.

“The designers I am talking to aren’t happy about this. They are dropping new designs and DJs are marking it down straight away. It is an usual way to do business.”