David Jones’ South African-based owner Woolworths Holdings is reviewing the recently expanded David Jones Food brand in an attempt to recoup losses, according to AAP.
On an analyst call on Thursday, group chief executive Roy Bagattini said the David Jones business has not been transitioning fast enough and that while the roll-out of David Jones Food convenience locations is progressing well, the larger format David Jones Food business is trading at a loss.
At a minimum, Bagattini said he hoped a review would get the food business to a break-even position by the 2022 financial year.
David Jones launched a partnership with BP in late 2019 and committed to open 21 further sites by the end of 2020, bringing the total number of co-branded sites to 31 by the years end.
The decision to review the business come as the broader business suffered a 65 per cent drop in annual earnings for FY20, with net profit hitting $190 million (R2.2 billion) – 54.5 per cent down on the previous year.
Woolworths Holdings has also received several non-binding offers for a potential sale and leaseback of its remaining David Jones properties, and said that discussions with landlords surrounding rent renegotiation and a reduction in floor space is progressing.
“The trading environment in both Southern Africa and Australasia remains challenging and uncertain and is expected to remain so for the foreseeable future,” the business said.
“The full economic impact of the pandemic is still unfolding and we expect consumer spending to remain constrained… The group’s intention is to ensure that we not only endure the impacts of the pandemic, but that we can learn from it and emerge both strategically and tactically stronger as a result.”