David Jones to change hands on a high

The South African owner of David Jones will hit the exit aglow this month, after reporting revenue growth in the luxury department store for the six months to December that was more than quadruple its annual sales in 2019, and ahead of an expected softening in consumer demand.

Roy Bagattini, chief executive of Woolworths Holdings, said its Australian holdings including David Jones and middle-market clothing retailer Country Road were thriving despite a challenging backdrop.

“What you’re seeing is a level of resilience in these businesses that is somewhat counterintuitive to a lot of the macro contextual indicators and news you see out there,” he said.

“Whether it’s house prices, record high-interest rates or the level of inflation, you would expect those effects to play through into a softening of consumer demand, but we haven’t seen it in the first period of this second half.”

While David Jones’ turnover and concession sales in the half year to December increased by 18.5 per cent compared with the previous year’s corresponding period, the company said it was not comparable because of government-imposed lockdowns in 2021. Instead, it pointed to an 8.8 per cent year-on-year increase in sales in the last six weeks of the half.

The results come after Sydney-based private equity firm Anchorage Capital Partners bought David Jones in December. Anchorage is set to take over the operating business of David Jones by the end of this month.

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Woolworths Holdings – distinct from Australian supermarket group Woolworths – purchased David Jones in 2014 for $2 billion. After a challenging period that included write-downs worth more than $1 billion across 2018 and 2019, Bagattini said David Jones was now the most profitable it had been since the company acquired it.

David Jones’ generated more than 9.3 billion rand ($750 million) in revenue in the six months to December, which is more than four times the $170 million it generated over the course of 12 months in 2019. David Jones grew by 13.6 per cent in the first eight weeks of the year.