David Jones chalks up $1.3bn in losses

The department store operator posted a near $500m loss in 2019 after costly impairments and writedowns

Ian Moir: ‘It has been a really tough three years, but we will get through it.’ Picture: Stuart McEvoy

Latest accounts lodged with the corporate regulator reveal the losses rung up by David Jones in the last few years, with the department store chain lurching to a near $500m full-year loss in 2019 after costly impairments and writedowns triggered by the poor retail trading environment.

Successive impairments since 2018 has wiped out any profits, with David Jones racking up ­almost $1.3bn in after-tax losses in the past two years, accounts lodged with the corporate regulator have revealed.

In August Woolworths Holdings, the South African retailer that owns David Jones, conceded the challenging trading environment and downturn in sales would force it to write down the value of DJs by $437.4m.

The DJs store portfolio had also identified onerous leases resulting in an additional provision of $22.4m in the 2019 financial year.

Woolworths Holdings bought David Jones for $2.1bn in 2014 but has now burned through more than half of that value, with the valuation of the department store now reduced to $965m.

In August Woolworths Holdings released its results to the Johannesburg Stock Exchange which showed DJs’ operating profit for 2019 almost halved from $64m to $37m. Sales slipped 0.8 per cent to $2.19bn.

Now Osiris Holdings, the local company that houses David Jones, has issued its statements with the Australian Securities and Investments Commission which show the retailer’s full balance sheet, including its bottom line ­result. According to the documents filed with ASIC, DJs ­recorded a net loss of $487.26m for 2019. In 2018 it recorded a bottom line loss of $785m with that year’s performance also stung by costly impairments of $816m.

The Osiris accounts reveal that for the last two years David Jones has rung up total net losses of $1.27bn. Woolworths Holdings chief executive Ian Moir — who remains as acting boss of David Jones and will now devote more of his time in Australia to turn around the business — believes the worst is now behind it.

“I think we can because we are differentiated, there is focus on the top-end customer, there is focus on being exclusive, having exclusive brands at the very top end … taking the cost base of the business down, having a great online business,” Mr Moir said.

“We can outperform the market, we have got to start getting the benefit of all the money we have spent on systems, stores and people.

“It has been a really tough three years, but we will get through it.”