DJs taps KordaMentha for advice as debt grows

David Jones has 47 stores in Australia. Picture: Bloomberg

Department store David Jones is working with advisory firm KordaMentha as it remains in talks with landlords and wrestles with debts of at least $400m across its Australian arm.

While rival Myer has parties assisting with negotiations between its landlords, experts are helping other retailers who have been hit hard by the restricted trading conditions linked to COVID-19.

It is understood that KordaMentha has been working with David Jones for months on its real estate portfolio.

The appointment comes in the build-up to the end of the financial year for David Jones and the Country Road group. Some market experts say David Jones has been performing better than expected during the COVID-19 period.

Already, David Jones, which is owned by South Africa-based Woolworths, has extended the payment time to its suppliers as it searches for ways to drive down costs.

Firms that specialise in restructuring are believed to be putting together plans that may help both Myer and David Jones, hamstrung by long lease agreements.

The Australian retail operations of South Africa-based Woolworths was last known to have debts of $464m.

This includes David Jones, Country Road, Mimco, Trenery, Politix and Witchery.

The Australian arm operates as a separate entity to Woolworths South Africa.

Department stores are reeling internationally, with the coronavirus pandemic offering yet another blow to the already struggling sector.

In the US, department store JC Penney filed for chapter 11 bankruptcy protection in Texas this month, becoming the biggest of the retailers in the US to seek a court restructuring during the pandemic.

As part of the restructure, it announced that it would be closing 240 locations, equating to 30 per cent of its stores, after already battling with changing shopping trends.

David Jones, run by Ian Moir, has 47 stores in Australia.

Last year, The Australian reported that David Jones swung nearly $500m towards a full-year loss in 2019 after costly impairments and writedowns triggered by the poor retail trading environment.

Successive impairments since 2018 wiped out any profits, with David Jones racking up ­almost $1.3bn in after-tax losses in the two years to 2019.

Woolworths Holdings bought David Jones for $2.1bn in 2014.