Private equity firm Anchorage Capital Partners (ACP) has acquired up-market department store chain David Jones at a remarkable 75% discount.
This move brings the 185-year-old retailer back into Australian ownership, marking a pivotal moment in its storied history.
Anchorage secured the acquisition of David Jones for a mere $92.5 million in March, a stark contrast to the $2.1 billion price tag it commanded in 2014 when South Africa's Woolworths Holding took ownership.
The financial records of David Jones' new parent company, ACP Riley Street, reveal that the retailer, including its cash assets, inventory and other holdings, was valued at $376 million.
Woolworths out
This transaction marks the conclusion of Woolworths Holding's tumultuous nine-year stewardship of the iconic department store. During this period, the store saw frequent executive turnovers and incurred substantial write-downs totalling $1 billion in 2018 and 2019. In its final full fiscal year under Woolworths' ownership in 2022, David Jones reported a slight dip in adjusted operating profit, down 0.6% to $83.7 million.
Following the acquisition, David Jones became a part of ACP Riley Street, with its financial performance now encompassing the period from March 27, 2023, to June 25, 2023. In the 2023 fiscal year, the company reported sales of approximately $2.3 billion and delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of $115 million.
David Jones, with 43 stores in Australia and New Zealand, employs approximately 6,200 people. Anchorage Capital Partners plans to continue the ongoing transformation of the retailer, focusing on streamlining supply chain operations and leveraging its extensive loyalty program and data to enhance customer engagement.
Spending up despite challenges
Despite the challenges posed by rising interest rates and inflation, chief executive Scott Fyfe expressed optimism. He noted that the recent Boxing Day sale had exceeded expectations, providing a boost to the company. Fyfe also highlighted the transition to online sales and is on track to achieve 20% of transactions through this channel.
The Australian Retailers Association forecasts a total consumer expenditure of $1.25 billion on December 26 — up 1.6% from 2022. And from the period between December 26 and January 16, the industry anticipates Australians will spend $23.9 billion.
Fyfe acknowledged the challenges posed by interest rate hikes, citing shifts in consumer behaviour and shopping trends. He emphasised the importance of value for money in attracting customers during these times.