On knife’s edge: David Jones could appoint administrators by Thursday

David Jones’ private equity owners are on the cusp of appointing voluntary administrators as soon as Thursday morning after talks with major landlord Scentre fell over when the department store failed to pay rent for October.

Westfield owner Scentre Group, which operates 17 shopping centres in which the prestige department store is located, rejected a restructuring proposal put forward by David Jones. A counter-proposal by Scentre was subsequently rejected by David Jones’ board of directors, according to a source close to negotiations but not authorised to speak publicly.

David Jones’ board directors are now assessing how long the 188-year-old retailer can continue trading before it appoints a voluntary administrator, which is expected to be McGrathNicol, the source said.

Chief executive Erica Berchtold and board directors Phillip Cave and Simon Woodhouse, who are executive chair and managing partner at private equity firm Anchorage Capital respectively, were convening a board meeting on Wednesday evening, with a decision on voluntary administration expected to be made by Thursday morning.

Scentre Group chief executive Elliott Rusanow said David Jones had not paid rent since October and “therefore are in breach”.

“We have made a generous offer to Anchorage Capital Partners that would have facilitated the continuation of David Jones trading,” Rusanow said in a statement. “That offer has disappointingly been rejected by them.”

David Jones’ initial restructuring deal to Scentre Group initially proposed handing over nine stores from February, keeping three stores at rents of 8 per cent of sales, continuing five stores on current terms, and unlocking $45 million in bank guarantees in exchange for equity.

“It’s a straight financial calculation as to how they can continue trading,” the source said. “Do they meet the solvency test? They need to sit down and discuss the finances.”

David Jones’ failure to pay rent for October was a key flashpoint in why talks with Scentre Group fell over, a source said. Other commercial property landlords are also owed rent.

A spokesman for David Jones confirmed that talks between the group and Scentre failed to resolve the impasse and talks had now concluded.

“We know what you know.”

A David Jones staff member who declined to be identified.

The retailer’s stores in Westfield Parramatta, Warringah Mall, Carindale in NSW, Indooroopilly Shopping Centre, Robina Town Centre, Sunshine Plaza in Queensland, Westfield Marion in South Australia, Westfield Doncaster, Southland, Carousel, Booragoon in Victoria, and Karrinyup Shopping Centre in Western Australia are suspected as earmarked for closure, according to analysis by financial services firm MST Marquee.

A sense of impending trouble has already pervaded some stores. Loss-making store Westfield Parramatta in western Sydney was exceptionally quiet when this publication visited on Wednesday morning. Few shoppers were browsing across both levels of the store. The further in, the quieter it became.

At the back on level one, near the birthday cards and beds, temporary cardboard panels created a wall with a sign reading “staff only beyond this point”. Through gaps in the makeshift screen, shelves, mannequins and a selection of stock including Christmas trees and suitcases could be seen, stored away from the public eye.

Signs advertising Black Friday sale offers, which expire in early December, had been collected and placed onto one of the counters. It’s unclear if staff were about to put them up or had just taken them down.

Store staff were reluctant to talk and declined to confirm if it would be closing, with one employee saying: “We know what you know”.

On Wednesday, David Jones’ lender Hilco said in a statement: “Hilco Capital has had no formal update on the status of negotiations.”

Hilco Capital confirmed last week that it had provided additional funding to see it through December, traditionally the most crucial time of the year for department stores.

“Hilco Capital has funded above the agreed facility to allow David Jones to increase stock holdings ahead of the busy Christmas trade and sales period,” a Hilco spokesperson said. The group had also been negotiating with multiple landlords to slash its rent bill and close some loss-making stores.

Lease and rent costs totalled $125 million for the 2025 financial year, but its debt burden also weighed heavily on the group with finance costs totalling $153 million, financial accounts released earlier this year show.

Suppliers have told this publication they were already restricting the financial terms of sales to David Jones due to lengthening payment terms. They will become unsecured creditors and potentially lose significantly on any outstanding bills if the retailer goes into administration.

ASX-listed retailer Accent Group confirmed it moved to cash-on-delivery after outstanding unpaid invoices earlier this year, which David Jones has since resolved. Menswear label M.J. Bale ceased supplying David Jones’ online store, but still operates about nine concessions on the retailer’s premises. Dozens of premium and designer labels have jumped ship to rival Myer over the past few months.

If David Jones collapses, Myer’s sales could be boosted by as much as $180 million and specialty retailers like JB Hi-Fi and Rebel may benefit from rent cuts, analysis from MST Marquee suggests. David Jones is the country’s 12th-largest retailer by floor space, ahead of Chemist Warehouse.

“Myer has 12 stores within close proximity to the likely closed David Jones stores. Up to half of the lost David Jones sales could switch to Myer,” MST Marquee analysts said. “If landlords aren’t able to backfill the space effectively, lower rents across specialty retailers may result.”

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.