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Words: Eli Greenblat | Kylar LoussikianProducer: Louise Starkey
Why the future of the nation’s oldest retailer is uncertain
The future of Australia's oldest and most glamorous department store, David Jones, is up in the air after parent company Woolworths Holding held talks with investment banks while considering selling the upmarket retailer.
The sale would finally end an investment odyssey, which has cost Woolworths billions of dollars in writedowns, seen the company churn through five CEOs, and created an ongoing headache for management in South Africa.
Speculation comes eight years after Woolworths paid $2.1bn for the Australian retailer.
It also follows Australia emerging from the worst of the Covid-19 pandemic, which left many of the high-end retailer's stores closed for months.
The end of lockdowns and restrictions is creating sales and profit momentum.
Woolworths is considering the sale now that the company has returned to profit, its properties have been sold and most of its debt has been paid off.
David Jones recently broke a three-year streak of losses to post its first bottom line net profit since 2018, lifted out of the red by property sales, lease benefits and an end to a horror run of impairments that grew to almost $1bn.
The addition of more than $70m in JobKeeper and other government wage subsidy programs helped David Jones return to profitability as its operations were shaken by prolonged lockdowns across Sydney and Melbourne.
The department store's accounts lodged on the Johannesburg Stock Exchange in late 2021 showed adjusted earnings for 2021 of $84m.
It is believed Woolworths is highly unlikely to get close to the $2.1bn purchase price it paid in 2014 when it launched its takeover bid for the then ASX-listed David Jones.
Woolworths Holdings remains focused on the operational turnaround of David Jones and ensuring that this iconic business is restored to its rightful market leadership position in Australia. We are not considering an exit from Australia.
Woolworths Holdings
Media Statement
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Swipe up for more information on the potential sale of Australia's oldest retailer.																		

Original URL: https://www.theaustralian.com.au/web-stories/free/the-australian/why-the-future-of-australias-oldest-retailer-is-now-uncertain