Christmas sales deal? Making sense of the DJs takeover rumours

A trading update last week confirmed sales at David Jones had skyrocketed by 55.3 per cent in the five months up to the middle of November, as CBD areas hummed back to life in a post-lockdown era.

Fellow department store imprint Myer has also been upbeat about trading in the lead-up to Christmas after surprising the market with a profit jump for the 2022 year and a strong start to 2023 trading.

Major shareholder and long-time Myer critic Solomon Lew had a win earlier this month when his board nominee Terry McCartney was elected by shareholders to become a Myer director. McCartney was upbeat about the company’s future at the store’s annual general meeting, saying the brand had “found its legs again”.

Both David Jones and Myer have been undertaking similar strategies over the past few years in a bid to stay relevant to a new generation of shopper: increasing their investment in digital sales, while working to slim down their bricks-and-mortar footprints.

“We continue to rationalise unproductive space, with trading space reducing by a further 3.7 per cent relative to the prior period,” Woolworths Holdings said about David Jones in its half-year report last week.

Meanwhile, the department store sector has benefitted from surprisingly strong spending over the past six months, jumping from $1.2 billion in August to $1.9 billion in September, according to Australian Bureau of Statistics data.

What could a new owner mean for the DJs brand?

Against this backdrop, retail experts say David Jones is an attractive opportunity for private equity firms- even if a buyer doesn’t intend to stick around for the long haul.

“If a private equity firm comes in, it’s a temporary bedfellow,” Brian Walker, founder of advisory firm Retail Doctor Group, said.

It’s possible a new buyer comes in to reshape the business into a more streamlined offering, with plans to resell or float the company in years to come.

“What comes out of this ultimately will probably be a smaller, omnichannel David Jones in select markets, and still a viable business, but not at the scale and grandeur it once was,” Walker said.

Whoever snaps up the company will have to work out how to cater for a generation of shoppers who weren’t raised to rely on bricks and mortar shopping, he said.

“We’ve got a generational change in consumers – the Baby Boomers that frequented department stores are now making way for millennials and Gen Z.”

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