Woolworths agreed to sell Australia\u2019s oldest department store chain David Jones to Anchorage Capital Partners, ending an expensive misstep for the Cape Town-based retailer.<\/p>\n
The deal will remove about R17 billion of liabilities related to the David Jones store portfolio, with the final value of the deal to be determined by the end of March, when the transaction is expected to be completed, Woolworths said in a statement Monday. Management expects to get more than the carrying value of the David Jones assets, it said.<\/p>\n
The 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 ($1.5 billion).<\/p>\n
\u201cThe history here has been a painful one,\u201d Chief Executive Officer Roy Bagattini said in a conference call. \u201cThe transaction allows us to overnight improve our return on capital by several percentage points.\u201d<\/p>\n
The sale allows management to shift its focus to other units, Bagattini said. Under predecessor Ian Moir, Woolworths tried to replicate its successful South African upmarket food business in David Jones, but it didn\u2019t work.<\/p>\n
In October, Bagattini said the David Jones purchase didn\u2019t make sense, with the two retailers being fundamentally different. Woolworths primarily sells own-branded goods and its Australian counterpart mostly offers other brands.<\/p>\n
Woolworths rose 1.7% at 09h03 in Johannesburg and has climbed 30% since Bagatinni\u2019s appointment on 14 January, 2020. That\u2019s compared to a 3.8% increase for the FTSE\/JSE Retailers Index, which suffered during pandemic lockdowns.<\/p>\n
The company will keep the flagship store in Bourke Street, Melbourne, which will be leased to David Jones on a long-term basis on market-related terms, it said. There will also be a transitional services agreement \u201cfor a period of time to ensure an orderly separation of David Jones from the group.\u201d<\/p>\n
For Woolworths, it\u2019s returning to core clothing ranges in its South African apparel unit and refocusing on the five local brands in its other Australian business, Country Road Group.<\/p>\n