As department store retailer David Jones gets set to return to Australian hands through a buy-out from Anchorage Capital Partners, the company's South African parent group has reported results that appear impressive at first glance.
Woolworths Holdings Limited (WHL) - not to be confused with Australia's Woolworths Group (ASX: WOW) - reports David Jones’ turnover and concession sales increased by 31.8 per cent and by 27.6 per cent on a comparable store basis in the December half, with its flagship and CBD stores performing ahead of expectations.
However, in the last six weeks of the year that include the peak Cyber weekend, pre-Christmas and Boxing Day events, sales only rose by 2.3 per cent; a level well below inflation, meaning that in real economic terms sales actually went backwards.
This is in contrast to the group's other brands in Australia and New Zealand that fall under the Country Road Group - namely Country Road itself as well as Politix and Witchery - that delivered strong sales growth of 8.5 per cent in the last six weeks of the year.
Unlike David Jones, the Country Road Group performance is closer to the national average growth rate of 8.6 per cent in the Christmas lead-up estimated by the Australian Retailers Association’s (ARA) in partnership with Westpac DataX.
WHL clarified December half sales were not comparable to the prior corresponding period due to the impact of lockdowns during the same half in 2021, and across both its Australasian businesses the share of sales swung sharply in favour of offline.
The share of online sales dropped by 10.9 percentage points to 17.2 per cent for David Jones, and by 7.7 percentage points to 26.1 per cent for the Country Road Group.
"The return of customers to physical stores, particularly in Australia, resulted in a substantial increase in brick- and-mortar sales, with the contribution of online sales moderating to 10.9 per cent of total turnover and concession sales, compared to 13.7 per cent for the prior period," Woolworths Holding reported in a statement to the Johannesburg Stock Exchange.
Last month WHL announced it had reached a deal to sell its David Jones business to Anchorage Capital Partners. It did not disclose the transaction price, but a source close to the agreement said it was worth around $250 million including an upfront cash consideration of $100 million and $150 million in dividends for WHL.
The South African group is also trying to sell its flagship property asset in Bourke Street, Melbourne, which will be leased to David Jones on a long-term basis on market-related terms.
The consideration estimate is markedly lower than the $2.1 billion paid by WHL for the department store brand in 2014, although WHL has reported that the latest agreement would remove around R17 billion (AUD$1.4 billion) in liabilities relating to the David Jones store portfolio.
Founded in 1838, premium department store owner David Jones has 43 stores and two distribution centres across Australia and New Zealand, as well as a rapidly growing e-commerce business.
The company's incoming owners, are known for having picked up consumer electronics retailer Dick Smith for $20 million in late 2012 in the lead-up to an initial public offering (IPO) in 2013, before offloading what remained of its stake in September 2014 for $105 million.
In early 2016 the consumer electronics retailer went into voluntary administration, but an Anchorage spokesperson claims issues that impacted Dick Smith "occurred two years after Anchorage sold the business as a result of decisions that were made which had nothing to do with Anchorage". Another example of a turnaround led by Anchorage was that of Brand Collective, which includes brands such as Volley, Shoes & Sox, Hush Puppies, and Julius Marlow.
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