David Jones Extends Supplier Payment Terms Amidst Mounting Industry Pressures
David Jones is implementing new payment terms, requiring suppliers to wait up to eight weeks after goods have sold to receive payment. This change follows a previous attempt in January to extend payment deadlines, which the company had attributed to an IT upgrade.
The new payment terms mandate suppliers to wait up to eight weeks after goods have sold before receiving payment.
Management Reassures Amidst Skepticism
David Jones and its private equity owner, Anchorage Capital, have proactively described concerns regarding the group's ability to pay bills as "misinformed." They assert that the company is well-positioned to manage current economic conditions and state that all concession partner payments are presently up to date.
Department Store Sector Under Pressure
Department stores globally are facing significant pressure from the rise of online retail, increased competition from smaller businesses, and reduced foot traffic in physical stores. David Jones reported a substantial $74 million loss for the 2024 financial year, which was the first full year under Anchorage's ownership. The company is also expected to report another loss for FY2025.
Anchorage Capital acquired David Jones in 2023 for $92.5 million, a drastic reduction from the $2.1 billion paid by its previous owner in 2014. Despite the current financial performance, Anchorage states it has invested $250 million in store renovations, loyalty programs, and digital infrastructure.
Supplier Relations and Market Shifts
Industry sources indicate that David Jones has been late in paying some suppliers and is transitioning to 60-day payment terms. While the company stated no payment changes were made without supplier agreement, reports suggest that some suppliers have reportedly been denied trade credit insurance, signaling a perceived increase in risk.
Further impacting its market position, David Jones has also lost exclusivity for certain beauty brands, with Mac Cosmetics specifically scheduled to transition to rival retailer Myer by mid-2026. Health and beauty products constitute a significant segment of its business, accounting for 22 percent of David Jones' $2.2 billion sales in 2024.
Analyst Outlook: A Challenging Future
Johannes Faul, a retail analyst at Morningstar, expressed skepticism regarding the potential for Australian department stores to reverse a long-term decline. He cites structural challenges within the industry and the pervasive impact of online retailers, such as Amazon, as major obstacles.
"It is difficult for Australian department stores to reverse a long-term decline given structural challenges and the impact of online retailers like Amazon." - Johannes Faul, Retail Analyst at Morningstar.