David Jones store closures: Sales take a hit amid Covid-19

It’s an icon of the Australian high street, but this week it was announced that retailer David Jones will close a number of its stores as sales continue to take a hit amid the ongoing coronavirus pandemic.

Despite a boom in online shopping, sales are reported to have slumped by as much as 35 per cent in March and April as consumers battled job losses and remained largely in lockdown due to Covid-19. As a result the retailer has been left struggling in debt.

David Jones’ parent company Woolworths Holdings, based in South Africa, announced the news in a trading update published on Wednesday, which directly addressed the “significant” impact the global health crisis has had on consumer’s shopping habits.

“COVID-19 has had a significant impact on foot traffic and store sales,” the update read. However the update also revealed that the chain has seen a slight increase in foot traffic due to the recent easing of restrictions across Australia.

Woolworths has provided David Jones with a loan of $75 million, with the offer of an additional $25 million if needed. The group has now US investment bank UBS to conduct a review of David Jones’ 48-store portfolio, with store closures and a reduction in physical floor space expected as a result.

A buyer has already been lined up for the Bourke Street Menswear building in Melbourne, while it is also expected that the group will look to sell the flagship stores on Sydney’s Elizabeth Street and Melbourne’s Bourke Street.

“We expect the challenging and fluid operating environment brought about by the pandemic, to continue for the foreseeable future. While the business is well prepared to take full advantage of any improvement in trading conditions as government restrictions continue to ease, these circumstances also present opportunity to take clear and decisive actions to improve the effectiveness of our business model,” the update said.

“In these unprecedented times, the Board and management team will continue to act swiftly and decisively to protect the group’s financial position, to optimise its liquidity and capital structure, and to reposition the business to deliver sustainable long-term shareholder value.”

Woolworths Holdings also owns the Country Road Group – which operates Country Road, Mimco, Witchery and Politix. The Country Road Group has also been impacted by dwindling sales in recent months, suffering a 50 per cent drop in March and April after the chain closed all of its stores as a result of social distancing guidelines.

The news comes just days after Wesfarmers announced that it would be closing many of its Target stores across the country, with more set to be converted into Kmart outlets. As many as 167 stores could disappear from the Australian high street as a result of the move.

Earlier this week, Target confirmed which stores would be affected and revealed that the first closures would take place as early as next month.