Australia's oldest retailer David Jones enters administration as economic pressures mount

David ‌Jones, ​Australia's 188-year-old department store chain, entered voluntary administration on Thursday, as rising costs, sluggish retail sales and supply chain pressures weighed on its business. The retailer joins other Australian firms that have restructured, cut jobs or closed as they struggle with the impact ‌of high fuel costs and a slowing economy.

David Jones stores will continue to operate under the control of FTI Consulting, the appointed receivers, while the firm reviews its operations. McGrathNicol has been appointed as voluntary administrators.

"A transaction process seeking offers for a recapitalisation of the business or a sale as a going concern will commence immediately, and will be ‌managed by McGrathNicol," FTI Consulting and McGrathNicol said in a joint statement. "We will manage this process carefully, mindful of the impact on some stakeholders but also ‌recognising the need for difficult decisions."

Founded in Sydney in 1838 by Welsh immigrant David Jones, the retailer describes itself as the world's oldest continuously operating department store. With about 6,000 employees across 38 stores in Australia and New Zealand, David Jones is one of Australia's most recognisable brands and predates London's Harrods by more than a decade.

For generations, Australian shoppers have turned to David Jones for clothing and accessories ⁠for milestone occasions, ​from formal wear to school and graduation ⁠attire. However, like its counterparts overseas, the retailer has struggled for more than a decade with the shift to online shopping and growing competition from fast-fashion chains.

PROFITS HIT The joint statement did not provide financial ⁠details, but the retailer has had financial problems for years.

David Jones CEO Erica Berchtold said the company would work with its administrators, receivers and secured lender during the voluntary administration process, ​Australia's closest equivalent to Chapter 11 bankruptcy in the US. Luxury US department store owner Saks Global, which battled similar retail trends, emerged from Chapter 11 ⁠in June after nearly five months with fewer than half of its previous stores and a quarter of its debt.

Scentre Group, which owns and operates Westfield shopping centres in Australia and New Zealand, offered a lifeline ⁠to ​David Jones, but it was rejected by chain owner Anchorage Capital, ABC News reported, citing Scentre CEO Elliott Rusanow. David Jones has stores at 17 Westfield locations.

In a statement to the Australian Securities Exchange on Wednesday, Scentre said David Jones had paid rent up to September 30. Earlier on Thursday, National Australia Bank, one of the ⁠country's largest banks, reported a steep drop in annual profit as its CEO warned of a growing risk of recession. Energy giant Woodside, meanwhile, said it was ⁠scrapping its dividend policy and would cut more ⁠than 500 jobs.

Australian graphic design platform Canva Group said on Wednesday it would cut around 22% of its workforce. The Reserve Bank of Australia raised interest rates for a fifth straight time this week, while warning of continuing inflation risks and price ‌pressures for households.

($1 = 1.4267 ‌Australian dollars)