Woolworths Offloads David Jones to Anchorage Capital Partners
SYDNEY — David Jones is back in Australian hands — at a bargain price.
On Monday, South Africa-based Woolworths Holdings Ltd. revealed it had sold its entire shareholding in the 184-year-old Australian department store chain to Sydney-based private equity firm Anchorage Capital Partners for an undisclosed sum, with the final transaction expected to be completed by March. Widespread reporting has put the deal at around 100 million Australian dollars, or $67 million at current exchange, which is a mere fraction of the $2.2 billion [$2 billion at 2014 exchange] price Woolworths paid for the retailer in August 2014.
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The deal does not include David Jones’ Bourke Street, Melbourne, flagship, which is valued at 250 million Australian dollars, or $168 million, on which David Jones will enter a long-term lease, with WHL expecting to sell the property in the next 12 months, the company said in a statement. The sale of the Melbourne flagship will complete a series of transactions in the David Jones property portfolio. In 2020, both David Jones’ marquee Elizabeth Street, Sydney, flagship and its Bourke Street, Melbourne, men’s store were sold for 504.4 million Australian dollars, or $379.7 million, and 120 million Australian dollars, or $84 million, respectively. In 2021, its Market Street, Sydney, men’s store was sold for 360 million Australian dollars or $275 million.
Nor does the deal include the Country Road Group, which WSA will hold onto, after acquiring the entirety of that business when it bought David Jones in 2014, after retail billionaire Solomon Lew agreed to sell his stake in CRG for 209 million Australian dollars, or $197 million. At that time, WHL already had an 87.9 percent stake in CRG, comprises the midmarket Australian fashion and accessories brands Country Road, Trenery, Mimco and Politix.
According to the latest filing with Australia’s corporate regulator, the Australian Securities & Investments Commission by Osiris Holdings, David Jones’ local holding firm, sales for the 52 weeks ended June 25 reached 2.06 billion Australian dollars, or $1.5 billion, down from 2.11 billion Australian dollars, or $1.53 billion at average exchange for the previous year, including merchandise sales and concession commissions. Profits after tax fell to 14.5 million Australian dollars or $11 million, for the year, down from 84.26 million Australian dollars or $61.2 million, in 2021.
In 2014, Woolworths predicted its transformation strategy for David Jones would deliver synergies of at least 130 million Australian dollars, or $121 million at then exchange, within five years. The plan included ramping up private label merchandise and omnichannel initiatives and loyalty program improvements.
On Monday, WHL said that notwithstanding progress made in the David Jones turnaround over the past two years, which has resulted in a significant improvement in the underlying operational and financial health of the business, the company concluded that the David Jones business was no longer aligned to the strategic objectives of the group.
Said Roy Bagattini, WHL Group chief executive officer, “This is a major milestone in the repositioning of WHL for growth, while simultaneously improving return on capital for our shareholders. The strategic rationale at the time of the acquisition did not materialize to the extent originally envisaged. While David Jones has successfully executed on its turnaround, notwithstanding the COVID-19 disruptions, now is the right time for the business to operate under new ownership, while WHL refocuses on its core South African and Australian Country Road Group businesses.”
Sydney-based retail consultant Russell Zimmerman, the former longtime head of the Australian Retailers Association, told WWD, “The price that Woolworths paid was very high in its day and most people said that. Woolworths have obviously decided to sell it and move on. They’re a very aggressive and very interesting retailer, but they’re a different retailer to what David Jones is in Australia. They have a big food focus, whereas David Jones is really looking at the luxury customer. I don’t believe that Woolworths heads to that same area.”
