Small businesses that supply David Jones are racing to recover their products after the 188-year-old department store entered voluntary administration.
Shelley Tzeegankoff, founder of Porter Jewellery, posted a video on Thursday showing her team making urgent arrangements to retrieve stock amid concerns that outstanding invoices may go unpaid.
David Jones made the shock announcement after failing to pay rent owed to Westfield owner Scentre Group, placing about 6,000 jobs at risk.
Retail analyst Barry Urquhart said the weakest suburban outlets across David Jones’ 38-store network were most likely to close. Customers have also been urged to use gift vouchers soon in case the retailer ultimately shuts down.
The crisis has created an immediate problem for independent brands whose products were already being delivered to David Jones stores.
Ms Tzeegankoff’s footage showed her and a staff member trying to recover a $50,000 consignment of designer jewellery.
‘We had a number of bulk shipments go out today for all the David Jones orders. Is it possible to reverse them and have them sent back to us?’ her employee was filmed asking a courier company.
Ms Tzeegankoff described the administration as a ‘very sad day for so many small businesses’.
Shelley Tzeegankoff (above), founder of Porter Jewellery, spent Thursday morning trying to recover a $50,000 shipment sent to David Jones
David Jones (above) entered administration on Thursday after failing to pay rent to Westfield owner Scentre Group
She said she was not abandoning David Jones, but needed to take steps to protect her brand.
‘Sometimes continuing to work alongside them during difficult periods can help both businesses emerge stronger,’ she wrote.
‘We made decisions in good faith based on the information available to us at the time. But our priority now has to be protecting our business, our team and everything we have worked so hard to build.’
The video drew messages of support, with commenters highlighting the small businesses caught in the fallout.
‘I feel for all the iconic Australian brands in this position. It is absolutely devastating,’ one person wrote.
‘My parents’ small business is in exactly the same situation. We had internal contacts at David Jones reassuring us for weeks that everything was fine, and then this news came out,’ another said.
‘So sad to see. Sending you lots of love and support,’ a third commenter wrote.
Sydney businesswoman Chloe Barry-Hang also addressed the crisis online, revealing that her towel-robe label, K Juliet, had only recently launched at David Jones.
Chloe Barry-Hang (centre), founder of K Juliet, said the brand was left with excess stock after ordering products to meet demand from David Jones stores
‘Launching with a major Australian retailer was a huge dream for us. David Jones is an iconic brand, so this was a major goal and milestone,’ she told followers in a video on Thursday.
‘We had been working towards this deal for such a long time.
‘My family gave up weekend after weekend to help pack the order because we could not afford to hire staff. They came in to help, including my 80-year-old grandparents, who spent the entire weekend packing with us.
‘We are a small business. We do not have large financial backers and we are certainly not overflowing with cash.’
Ms Barry-Hang said only the first shipment of K Juliet robes had reached David Jones stores when the retailer announced its administration. Several additional orders were already in transit.
The stock had been ordered in advance to meet the high inventory requirements associated with a physical retail rollout.
K Juliet now faces a significant surplus of products with its website the only remaining sales channel.
‘The stock has already been paid for and is on its way here. Most of it has actually arrived,’ Ms Barry-Hang said.
Ms Barry-Hang said she was uncertain how K Juliet (above) would cope financially
‘We wanted to make sure we could get the products to everyone on time.’
‘That stock is not something we will be able to sell through easily. There is a huge amount of it.’
She jokingly suggested that people looking for Christmas gifts could shop through her online store.
‘We are incredibly sad, deeply disheartened and obviously under enormous stress,’ Ms Barry-Hang said.
‘I do not know what we are going to do with all this stock, or how we are going to manage financially.’
David Jones has already begun marking down major brands, including Hush Puppies and Effie Kats, with many products labelled ‘reduced to clear’.
However, customers hoping for the steep discounts often seen during a retail collapse may be disappointed.
Mr Urquhart said David Jones could not afford deep liquidation discounts because the retailer needed to conserve cash.
David Jones (above) told its 6,000 employees on Thursday that it had entered voluntary administration
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‘In retail, whenever you offer a discount, every dollar of that reduction comes directly out of your profit,’ he said.
‘They need surplus cash flow. They cannot generate that by launching a dramatic discount campaign or clearance sale.’
Staff were told on Thursday that the David Jones board had appointed voluntary administrators from McGrathNicol, while the retailer’s main financier had appointed FTI Consulting as receivers.
McGrathNicol and FTI Consulting said in a joint statement that David Jones’ physical and online stores would continue trading under the receivers’ control while the businesses were assessed.
David Jones had sought a temporary suspension of rent payments and permission to shut several stores before their leases expired.
The retailer had also reportedly asked landlords to release about $70 million held as lease security so it could continue paying employees and suppliers.
Scentre Group said David Jones had breached its leases by failing to pay October rent. It said the retailer had been offered delayed rental payments and the option to close some Westfield stores during the next 12 months.
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