After 188 Years, David Jones Collapses into Administration

David Jones, trading for 188 years, has entered voluntary administration over unpaid rent across its 38 Australian and New Zealand stores, with more than 5,600 employees facing an uncertain future.

Voluntary administrators McGrathNicol said on Thursday that the retailer's physical and online stores would keep trading while the business is restructured. The administrators are expected to run the company — likely closing unprofitable stores — until a new owner is found.

The collapse didn't come out of nowhere. Consumer group Choice recently warned shoppers to use their gift vouchers sooner rather than later. Poor sales and major brands exiting the store had left the retailer in a precarious position for months. Just over a week ago, David Jones secured $10 million in emergency funding to buy stock ahead of its crucial pre-Christmas sales.

How did a 19th-century giant get here?

Welsh-born immigrant David Jones opened his first store, David Jones and Co, in central Sydney in 1838. His goal was to sell "the best and most exclusive goods […] that embrace the everyday wants of mankind." Working with a London-based buyer, Jones had a direct line to the latest trends. By the start of the 20th century, the business had become a full department store.

The model was enormously profitable for decades. It rested on three pillars:

• Service. Department stores delivered an elevated level of customer care that smaller competitors couldn't emulate.
• Convenience. Before shopping centres existed, department stores put everything under one roof.
• Exclusivity. Exclusive rights to major brands let stores position themselves as arbiters of style.

Large sales volumes let stores buy an expanding range of goods at discounted rates, then pass competitive prices to shoppers — a loop that stimulated even more mass sales.

What broke the model?

All three pillars cracked, and slowly.

From the 1960s, self-service retailing disrupted the stores' historic level of service. Staffing levels fell. Casual workers replaced full-time employees, and many customers missed the old service even as casualisation continued.

Suburban shopping centres then undercut the convenience argument — ample car parks and rows of specialist shops under a single roof. Online shopping went further: often cheaper, and even more convenient. And when major brands started opening their own stores, the department stores' exclusive hold dissolved. The counter-move — in-store "concessions," a store within a store — recast department stores as mere clearing houses.

Where did the money go?

The numbers tell the decline plainly. By 2014, the sector's challenges pushed David Jones and Myer into merger talks. Those talks ended when South African conglomerate Woolworths Holdings Limited acquired David Jones for $2.1 billion.

The new owner tried a revival. It improved private label offerings and announced an upgrade of the flagship Elizabeth Street store in Sydney. The cost was heavy: the historic Market Street store was sold off, followed by other property divestments, including Elizabeth Street itself, which was leased back. In 2016, the head office moved to Melbourne.

After a $400 million renovation, the Elizabeth Street store reopened in December 2019 — months before COVID-19 hit. Digital retail boomed while bricks and mortar floundered, and post-pandemic hopes were dashed by cost-of-living pressures. After almost a decade of frustrating results, Woolworths Holdings sold David Jones to private equity firm Anchorage Capital Partners for just $100 million. The sale excluded several properties and the Country Road business, but the heavily discounted price signalled one thing: David Jones was not a healthy business.

What's next for David Jones — and Myer?

The question now is whether upmarket and mid-range department stores can survive at all. The omens aren't good. Rival Myer recently announced a $276.5 million loss for the 2026 financial year.

Survival, per the analysis, depends on a radical overhaul of the 19th-century business model — learning from the past, which is easier said than done. Without a willingness to be more innovative and bold, there will no longer be stores like David Jones.