David Jones Records Record Sales While Receivers Chase Buyers

David Jones posted record foot traffic and sales over the weekend, days after the 188-year-old Australian department store chain collapsed into voluntary administration and receivership. Receivers FTI Consulting confirmed the surge in a Monday trading update, calling the numbers proof of public support for the brand.

"Since the Receivers' appointment foot traffic and sales throughout David Jones stores and online has been at record levels, reinforcing the public's love for David Jones and support for an iconic Australian brand," FTI Consulting said in the update.

The retailer entered voluntary administration and receivership last week after significant cash flow challenges and failed attempts to renegotiate lease agreements. Global luxury brands rushed to pull stock from David Jones shop floors, and a cluster of small Australian businesses say the collapse left them out of pocket.

Why are shoppers still turning up?

Customers flocked to stores nationwide, eager to secure clothing, homewares and personal goods on clearance before Christmas. The Chadstone location — a cornerstone tenant for the upmarket shopping centre — saw waves of customers, with many queuing for Stanley tumblers. Footage from inside the Sydney CBD flagship on Saturday showed large crowds.

FTI Consulting said David Jones stores and the e-commerce platform continue to trade and have seen significant shopper interest. The receivers are now ordering replacement stock with the blessing of secured lender Hilco.

"Whilst there were limited instances of brand partners withdrawing from some stores, the Receivers have overall had very positive engagement with David Jones' trade partners and are working with these stakeholders to ensure customers continue to have access to leading brands," the trading update said.

What has changed for customers?

Trading terms have tightened. David Jones reportedly stopped selling gift cards past Saturday but continues accepting them at face value, both in-store and online. The refund policy has been wound back: items purchased past November 7 are only eligible for exchange within 14 days of purchase, unless faulty. FTI Consulting said customers remain subject to protections under Australian Consumer Law.

"With regards to trading policies, if there are any changes to arrangements with customers, David Jones will communicate those changes to customers and update its terms and conditions accordingly," the update said.

How deep is the financial hole?

The scale of the hardship keeps growing. Documents created by David Jones and its private equity owners Anchorage Capital Partners detail $100 million in outstanding payments to trade creditors, the Australian Financial Review reports. That sits on top of a reported $140 million owed to Hilco, plus $80 million David Jones owes to Hilco itself.

Who wants to buy David Jones?

Separate to FTI Consulting's receivership, McGrathNicol is running a campaign to sell or recapitalise the business. Restructuring partner Matthew Hutton said in a statement published by The Australian that the business has received an "extraordinary level of inbound interest from a range of highly credible industry players and financial investors." McGrathNicol will reportedly advertise the David Jones business to potential buyers this week.

What happens to the stores and 6,000 staff?

Any sale or recapitalisation carries the prospect that many unprofitable stores will close, letting the business re-emerge in a streamlined format. Those closures would carve into a workforce of some 6,000 staff across shop floors and back office operations.

FTI Consulting revealed no imminent plans to shutter stores in its most recent update. "At the time final decisions are made, David Jones will communicate those first to any employees and other stakeholders who may be impacted," the trading update said.

"We would ask that speculation on this matter is avoided out of respect for the real people who are the heart of the David Jones business and continue to put customers first every day," the update said.

Buyer interest, Hilco's backing for replacement stock and record Christmas-season trading give the receivers room to run a sale process — but the store network and its 6,000 jobs remain the unresolved question hanging over any deal.