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Why David Jones is more likely than most retailers to survive the COVID-19 downturn

3AW Afternoons

David Jones has accelerated plans to close some of its 48 Australian stores, and the department store is in the final stages of selling one of its most iconic buildings, but a retail analyst says it’s a better financial position than most retailers.

The retailer has swapped contracts with the buyer of the David Jones menswear store on the south side of Bourke Street, with settlement expected for July this year.

It comes as the retail sector struggles to cope with the coronavirus downturn.

David Jones sales slumped by 25.8 per cent in the eight weeks to the end of April, compared with the previous period.

Despite the grim outlook, retail analyst and senior business reporter at The Australian, Eli Greenblat, said David Jones is in a good position compared to most retailers.

“Although they’re struggling like so many other retailers, they are in a stronger position in that they own some key properties both in Melbourne and in Sydney, worth quite a lot of money,” he told Alicia Loxley, filling in for Dee Dee.

“When times are tough, as they are now, David Jones can sell some of those properties, raise some cash and then pay down debt or use that money for other purposes.”

Mr Greenblat said the iconic retailer may have to close some stores in coming years, but it’s unlikely to disappear from Bourke Street altogether any time soon.

“The plan is to sell it and then lease it back,” he said of the menswear store.

“That is a key … location which I’m sure David Jones would want to stay in for the long-term.

“They probably need to really close down a few stores, have a lot smaller store numbers across the country.”

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3AW Afternoons