Woolworths Holdings Ltd. is nearing a deal to sell Australia’s oldest department store chain David Jones to Anchorage Capital Partners for about A$130 million ($89 million), according to people familiar with the matter.
(Bloomberg) — Woolworths Holdings Ltd.
is nearing a deal to sell Australia’s oldest department store chain David Jones to Anchorage Capital Partners for about A$130 million ($89 million), according to people familiar with the matter.
The parties are ironing out final details of the transaction, which could be announced as soon as next week, said the people, who asked not to be named as they aren’t authorized to speak publicly.
As part of the deal, Johannesburg-listed Woolworths plans to retain ownership of its flagship Melbourne city real estate, which it will lease to David Jones, the people said.
There is no guarantee such a deal will eventuate and talks could still fall through, the people said.
Representatives for Anchorage and Woolworths declined to comment, while a representative for David Jones didn’t immediately respond to requests for comment.
A change of ownership would mark another attempt to transform the near 200-year-old David Jones after Woolworths acquired the chain in 2014 for around A$2.2 billion.
Woolworths tried to replicate its successful South African upmarket food business in David Jones without success. Then the Covid-19 pandemic started, forcing store closures and putting the company on the back foot.
In October, Woolworths Chief Executive Officer Roy Bagattini said in the company’s annual report the group was “considering all possible options” for the future of David Jones, following years of writedowns, an annual loss and the departure of ex-CEO Ian Moir in early 2020.
Read more: Woolworths CEO Scraps Southern Hemisphere Retail Dominance Plan
David Jones enjoyed a 55% jump in total sales for the 20 weeks ended Nov.
13 compared to the same period a year earlier when much of Australia was under lockdown, according to a trading update. The rebound saw the retailer’s flagship CBD stores perform “well ahead of expectations,” even as online sales decreased by around 29%.
Anchorage’s potential acquisition signals a vote of confidence that the pandemic-induced online shopping habits are not permanent and that vigorous attention to the basics of the business model such as the supply chains and merchandise management could yet prove profitable in the long term provided it is not saddled with excessive debt.
–With assistance from Janice Kew.
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