By Emma Koehn
The retail sector has been swept up in a rush of speculation that David Jones is on the cusp of new ownership as private equity firm Anchorage Capital is expected to snap up the department store this Christmas.
But David Jones is keeping tight-lipped about the rumours and it appears a deal has not been formally signed off yet, even though sales talks are progressing.
Speculation has been rising since earlier this year that Woolworths Holdings was keen to offload the department store chain.Credit: Michael Quelch
The Australian Financial Review reported on Wednesday that executives from David Jones’ South African parent company, Woolworths Holdings, flew to Australia over the weekend to green light a sale to suitor Anchorage Capital.
A David Jones spokesman declined to comment on those reports. Those with knowledge of the discussions said a deal had not yet been signed off, though it could be formalised before Christmas.
Speculation has been building throughout 2022 that the company’s owner, Cape Town-based Woolworths Holdings, was looking to exit the business eight years after buying the brand for $2.1 billion.
Market speculators are putting the value of the sale at between $120 million and $150 million – a fraction of the sale price brokered less than a decade ago.
It is expected the deal will exclude David Jones’ flagship store in Melbourne’s Bourke Street. Woolworths looks set to hold on to the property.
Chief executive Scott Fyfe looks set to stay on with the business after the sale, with Anchorage’s team impressed by the current leadership and happy to back them.
It’s understood that the private equity firm will have a strong “omnichannel” focus as part of its strategy to boost the brand, and will continue to invest in upgrading its stores as well as working to make the shopping experience seamless for customers whether they interact with the brand online or in store.
Woolworths had big plans to transform the company into a more experiential retailer but struggled to gain traction and David Jones was hit hard by COVID-19 retail lockdowns over the past two years.
In October, Woolworths Holdings chief executive Roy Bagattini said the company was in “better shape than it had been in some time” and that the retailer was ready to explore all options for the business to unlock value for shareholders.
A trading update for the five months to November showed David Jones had bounced back from lockdowns and was now delivering sales ahead of pre-COVID levels.
“David Jones’ turnover and concession sales increased by 55.3 per cent, with our flagship and CBD-located stores performing well ahead of expectations,” Woolworths Holdings said in an update to shareholders.
David Jones and its rival department store operator Myer have been upbeat about Christmas sales demand.
“We saw record trading volumes and sales at the recent Black Friday/Cyber Monday shopping events, and this momentum shows no signs of slowing in the lead-up to Christmas,” David Jones chief executive Scott Fyfe said last week.
Anchorage specialises in buying businesses that are “not performing to their full potential” and has bought out high-profile retail brands in the past including Brand Collective, which owned the Volley brand of shoes and licence for products such as Hush Puppy.
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