RETAIL SECTOR: Market talk is rife Woolworths will offload problem child David Jones – but will it?

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The rumours should be no surprise to the market. David Jones has been failing for a long time. By September 2020, the Woolworths Australian businesses’ combined debt had snowballed to about R4.3-billion.

The market has been abuzz this week with rumours that Woolworths Holdings is finally making moves to sell its Australian problem child, David Jones. Following a few articles in, media speculation is rife, although Woolworths has issued a media statement, saying it “remains firmly focused on the operational turnaround of David Jones”.

Woolworths also used the assets of David Jones’ sister company in Australia, Country Road Group, as a cross-guarantee for the debt held by David Jones. However, in the last few years, Bagattini has been steadily selling off David Jones’ real estate, cutting costs wherever possible. However, Vianello said it seems Bagattini has approached merchant banks to look at selling David Jones but he doesn’t have to announce that he is exploring possibilities.

Gilmour called it last year already in an investor note titled “Breaking up is hard to do”, where he stated that David Jones is likely to end up in insolvency.

 

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