David Jones has announced plans to scale back its empire after suffering $33million in losses amid COVID-19.
Ross Bagattini, CEO of Woolworths holdings, the South African parent company of David Jones and Country Road, on Thursday revealed the department store chain would close 20 per cent of its stores within the next two years.
Mr Bagattini said Australia had too many stores and original plans to downsize by 2025 would be fast tracked to be completed within two years, with as many as ten set to shut.
‘There’s no doubt we have too many stores for what I think our business purpose is in Australia,’ he told the Sydney Morning Herald.
David Jones is set to shrink its Australian network by 20 per cent as the company suffers a $33million loss in the wake of the COVID-19 pandemic
‘It is overstored… and I would expect to see a level of reduction coming through.’
The retail boss said he has been in discussions with landlords to accelerate the process due to the financial impacts of the pandemic, which has seen sales plunge 6.9 per cent compared to last year.
Total revenue for 2020 has suffered 6.4 per cent decline to $2.06billion.
Rival department store Myers fared worse, with a 15.8 per cent drop in sales.
However, while the coronavirus outbreak has hampered in-store sales, David Jones’ online sales have doubled, accounting for 14.8 per cent of all profits.
Mr Bagattini, who left his president role at Levi in January to join Woolworth Holdings, said the retail landscape remains challenging.
He expressed plans to rejuvenate the department store chain to remind shoppers of the retail experience it offers.
Mr Bagattini said he plans to draw shoppers back to David Jones by emphasising the retail experience the chain offers
‘Our responsibility is to ensure that it is relevant in today’s context, and that’s through the whole brand environment, the store look and feel, the experiences, the services that all once made department stores a great place to shop,’ he said.
Despite the impending closures, David Jones has managed to claw its way back after having recorded a 35 per cent sales slump over March and April.
The retail giant is not the only business that strategically shrunk its network amid the crunch of the pandemic in order to stay afloat.
In May, Target announced 167 of its stores would close in a massive restructure, as Australian shops continue to struggle in the pandemic.
The struggling Australian retailer will close 75 of its stores, and convert 92 others into Kmarts.