Woolworths Holdings paid A$2.1B for David Jones in 2014 and sold it for about A$100M

In 2014 South African retailer Woolworths Holdings Limited (WHL, unrelated to Australia's Woolworths supermarkets) paid more than A$2 billion for David Jones, the 184-year-old Australian department store chain. ABC News described the deal as part of then-CEO Ian Moir's ambition to turn WHL into a leading force in the southern hemisphere. The ABC also reported that to win the support of Solomon Lew, WHL bought him out of Country Road at an "exorbitant" price.

The purchase did not pay off. WHL wrote more than A$1 billion off the value of David Jones in 2018 and 2019, sold three of the chain's four CBD properties to prop it up, and saw the business churn through a list of chief executives.

In December 2022 WHL sold David Jones to Sydney private equity firm Anchorage Capital Partners for a reported A$100 million, a price neither side confirmed. Analyst Roger Montgomery called that 5% of what WHL paid. The deal excluded the Melbourne Bourke Street building, estimated to be worth about double the purchase price, which David Jones would lease back from WHL.

Bought for A$2.1B in 2014, written down by more than A$1B in 2018-19, sold for a reported A$100M, about 5% of the price.

WHL paid more than A$2B for a department store chain whose format was losing share to online competitors.

The purchase was driven by growth ambition for WHL, not by a plan that fixed David Jones's trading problems.

Property sales and write-downs failed to turn the business around, and rising interest rates were expected to dent retail spending in 2023.

A trophy brand in a shrinking format is not a growth platform. Pay for the cash flows, not the heritage.

The sale was due to complete in March 2023. The new owner said it would work with CEO Scott Fyfe on the next phase of transformation. David Jones had 43 stores in Australia and New Zealand and 7,500 staff, and its CEO would not rule out store closures or job losses. WHL kept Country Road Group, including Witchery, Trenery, Mimco and Politix. WHL CEO Ray Baggatini called the outcome "disappointing, to say the least" and said the company had committed to making very different capital decisions, adding that it had been "a business case for us, in terms of what not to potentially do".