Change is the one constant in retail, and few names show it more clearly than David Jones. Australia's oldest department store lost $95.5 million before tax in FY25, has breached a loan covenant, and missed the 30 October deadline to lodge its FY26 accounts. Reports suggest a buyer may want the brand and a handful of flagships rather than the full network.
At Olvera Advisors, we look at situations like this through one question: if the business resets, who carries the cost? Here is our view of a David Jones trading from 15 stores.
David Jones turned over about $2.0 billion in FY25 (year to June 2025), down 8.7%. Applying a gross margin of around 37%, near its last disclosed level, its cost of goods sold is roughly $1.26 billion a year. That is the money flowing to brands and suppliers, whether as stock David Jones buys outright or as the brand's share of concession sales.
Closing 60% of stores would not remove 60% of sales. The CBD flagships carry the business: Sydney's Elizabeth Street store alone was reported at 15% of total sales in 2020. Online, an estimated fifth of sales, is unaffected, and some shoppers from closed stores would move to a surviving store or the website.
| Scenario | Top 15 stores' share of store sales | Sales recaptured | Net sales lost | Reduction in supplier purchases |
|---|---|---|---|---|
| Low impact | 80% | 35% | ~$211m | ~$133m |
| Central | 72% | 25% | ~$340m | ~$214m |
| High impact | 60% | 15% | ~$551m | ~$347m |
In our central case, David Jones becomes a business of about $1.66 billion, buying roughly $1.05 billion of goods a year, a 17% reduction. Gross margin, online share, flagship concentration and recapture rates are our assumptions, not disclosed figures.
Landlords - 23 anchor boxes to resolve
Landlords face the most visible exposure with up to 23 vacant department store boxes, mostly in suburban and regional centres. These sit outside the top 15, so they are the stores a buyer is least likely to want.
- Leases. Expect negotiated surrenders, rent relief and lease restructures before outright vacancies. A flagship-only buyer leaves the remaining lease book for landlords to work through.
- Foot traffic. A department store anchors a mall wing. When it goes, neighbouring specialty tenants lose traffic and seek relief of their own. The Eastland exit in January 2024 left Myer as the centre's only department store.
- Backfill. Large single-tenant boxes rarely relet as they are. Subdivision into mini-majors, entertainment, food or health uses takes capital and time.
Landlords holding CBD and super-regional space, such as Chadstone, stand to benefit. A 15-store David Jones concentrates its traffic there.
Staff - 1,300 to 2,000 direct roles at risk
IBISWorld puts David Jones' workforce at around 5,650. If store roles fall in line with lost store sales, we estimate 1,300 to 2,000 direct roles would go.
The true number is higher. Concession floors are staffed by the brands themselves, so closures also cut roles at Country Road, beauty houses and designer labels that never appear on David Jones' payroll. Head office, distribution and visual merchandising teams would shrink with the network.
These are capable, transferable people. Experienced luxury and beauty staff are sought after by Myer, brand-owned stores and growing direct-to-consumer labels. The harder impact lands in regional centres, where David Jones may be the only premium retail employer.
Suppliers - modest for the market, serious for some brands
Across the market, the shock is contained. IBISWorld sizes Australian clothing retailing at $28.3 billion in 2025, and luxury clothing, footwear and accessories at $7.4 billion. Fashion makes up roughly 59% of David Jones' mix, about $1.2 billion or 4% of clothing retail. Our central case removes around $200 million of that: 0.7% of the clothing market and 2–3% of the luxury segment.
Most of that spending moves rather than disappears, to Myer, brands' own stores and websites, and online retailers. The pressure concentrates in three places:
- Wholesale-dependent Australian labels. For mid-sized designer and premium brands, David Jones can be a large share of wholesale volume. Losing 23 doors can mean a double-digit revenue fall, with markdowns and unsold stock pushed back to the brand. What we aren’t seeing is a support plan to bring these brands back in post he restructure.
- Concession brands. They lose doors, fixtures and their own floor teams. The shift has already begun: Country Road Group plans to withdraw almost 100 of its 280-plus David Jones concessions from early 2027. Global licensees will see drops in volume which will impact their pricing structures expect moves to retailers with larger platforms.
- Trade credit. With a covenant breached and Christmas stock reliant on lender support, suppliers will tighten terms or seek prepayment. That can force further range cuts and a cycle that is hard to break.
Distribution - fewer pallets, more parcels
A 15-store network serves CBDs and super-regional centres only. Outer-suburban and regional shoppers lose physical access and move online or buy direct from brands, which favours labels with established direct-to-consumer capability.
Store replenishment volumes fall by roughly 30–40%, while online fulfilment grows as a share. Freight shifts from pallet deliveries to parcel networks, and David Jones' distribution centre costs are spread across fewer units, lifting the cost per item.
Our view - act before the announcement
For the Australian fashion market, a smaller David Jones is a reshuffle. For those tied to its weaker stores, it is a material event, and the best outcomes go to those who prepare early.
- Landlords: map exposure by centre, model backfill options for each box, and engage neighbouring tenants before they come to you.
- Suppliers: quantify revenue sitting in non-flagship doors, review credit terms and security, and build out direct and alternative wholesale channels.
- Boards and lenders: stress-test forecasts against a reduced David Jones footprint now, while there is still time to choose your options.
The brand will likely endure in some form. The real question is who absorbs the cost of the stores it leaves behind, and whether they planned for it.
If your business has exposure to a department store restructure, the Olvera Advisors team is happy to talk it through.
Figures are Olvera Advisors estimates based on published data and the assumptions stated. David Jones' FY26 accounts had not been filed at the time of writing. This article is general commentary, not financial or legal advice.
Sources
- The Nightly – David Jones reveals $95m loss
- ChannelNews – Who will buy David Jones
- Real Estate Source – Supplier exodus
- YourLifeChoices – Loan covenant
- Ragtrader – David Jones gross margin
- The New Daily – Elizabeth St share of sales
- IBISWorld – Clothing retailing market size
- IBISWorld – Luxury clothing retailing
- IBISWorld – ACP Riley Street Group (employees)
- ECDB – David Jones category mix
- Green Street News – Eastland closure
