David Jones is set to see an accelerated restructure of its store network after the impact of COVID-19 hit parent company Woolworths Holdings.
A review of the capital structure of Woolworths’ Australiasian arm, which including Country Road Group, has been initiated in partnership with UBS and will see borrowings restructured and property portfolio analysed.
Discussions with Australian landlords are already underway in order to facilitate a further reduction in floor space across the David Jones network after sales fell 35.8 per cent in the eight weeks to May.
While David Jones’ store network remained open during the lockdown period, customers were largely self-isolating or staying away from retail locations due to Government pressure and fear of fines.
Since lockdown measures have begun to ease the business has seen a positive uplift in footfall and an encouraging sales increase.
“This recent update reflects the tough and unprecedented trading conditions that have dramatically impacted performance across the retail sector globally,” said Woolworths Holdings Group chief executive Roy Bagattini.
“Notwithstanding the significant challenges we currently face as a business, we are well placed to respond rapidly and effectively to changing customer dynamics and capture the market opportunities that arise [and] we remain focused on the implementation of the strategic initiatives that will address the current and emerging needs of all our stakeholders.”
These initiatives also affected Country Road Group, which saw a 50.4 per cent drop in sales during the eight weeks to May.
Both Country Road and David Jones saw strong online pickup during the period in line with the broader industry trend.
And while a downsizing of floor space has been on the cards for David Jones for some time, the impacts of COVID-19 have pushed business’s industry wide to reconsider their operating models.
Struggling discount department store Target will see its stable of stores either shuttered or converted into its higher-converting stablemate Kmart – the result of a review into the business that became more pertinent with the current crisis.
In total the weeks spent in a state of lockdown cost the retail industry $5.3 billion according to the Australian Bureau of Statistics, with even supermarkets and grocery stores losing out in the month of April.