David Jones is facing a thrash of scrutiny over the department store’s financial health, as it takes on extra cash injections to drive inventory through the upcoming peak period.
This has led to a few media mastheads raising concerns about David Jones’ future, with some questioning whether it is on the brink of collapse.
According to the Australian Financial Review, the department store was handed an extra $10 million in “emergency capital” from its lender Hilco Capital to buy more stock for the upcoming peak period. This was reportedly after long discussions between the two, as David Jones was concerned it didn’t have enough stock for the busiest time of the year.
Earlier this week, the AFR shared news that David Jones had breached a covenant in the original facility deal with Hilco in a loan of $230 million.
Hilco confirmed with Ragtrader that it had funded above the agreed facility to help David Jones increase its stock holding ahead of peak. The firm added that it remains supportive of the business, adding that any inference otherwise is false.
David Jones' owner Anchorage Capital Partners – which bought the department store from Woolworths Holdings Limited, South Africa for $100 million in December 2023 – also continues to back the business.
A spokesperson for ACP told Ragtrader that the firm continues to support David Jones through a "prolonged period of weak consumer confidence and significant structural change across the department store sector", and has committed "substantial capital and supporting investment in the business’ transformation. Since being snapped up in late 2023, ACP injected $250 million in capital to help upgrade David Jones' touchpoints.
All this scrutiny comes amid a tumultuous 2026, with the department store fielding issues around delayed supplier payments earlier this year, with multiple reports indicating some suppliers are still seeing delays.
That comes off the back of prominent losses recorded in its FY24 and FY25 reports, with these losses deepening to $95 million in FY25 alongside an 8.7 per cent slip in total sales to $2 billion.
A David Jones spokesperson has since responded to the recent reports, saying it does not comment on speculation.
“CEO Erica Berchtold’s priority is to accelerate the execution of the business’s INSPIRE30 strategy and is in advanced discussions with key stakeholders about how David Jones is adapting to the ever-changing retailing landscape,” the spokesperson said.
“This includes a review of the portfolio of stores across Australia and the trading terms with suppliers and brand partners."
Earlier this year, Ragtrader spoke with Paul Zahra and Bernie Brookes about the future of the department store model, with Brookes predicting that major department stores in Australia will shrink their store portfolio to flagship destinations.
He also expects to see a greater, more competitive online presence, with a keen focus on products that are controlled and owned.
“In Australia alone there is nearly $5 billion in turnover in premium department stores each year. That is a great model to build upon rather than suffer death by a thousand cuts,” Brookes said.
Zahra added that the department stores that are leaning into change – such as investing in experience, sharpening their curation, and creating environments that people actually want to spend time in – are showing that the model absolutely has a future.
“Physical retail has something e-commerce can never fully replicate: human connection, discovery, and the joy of a great in-store experience. The opportunity is enormous for those willing to evolve,” Zahra said.
“The model for department stores right now needs to be a significant investment in digital, the leveraging of AI and a strategic reduction in their physical footprints.
"I think we'll look back on this period as the moment the best retailers separated themselves from the rest – and that's an exciting prospect for the industry.”
The troubles at David Jones come as the overall fashion and retail market is getting squeezed from both ends.
Clothing, footwear and personal accessory retail turnover fell 1.4 per cent in 2023 and 0.2 per cent in 2024, then grew 2.9 per cent to $34.8 billion in 2025, according to Australian Bureau of Statistics experimental estimates based on bank transaction data. Total retail turnover grew 3.1 per cent, 4.1 per cent and 4.4 per cent over the same years.
In the first eight months of 2026, fashion category turnover rose 5.9 per cent year on year, compared with 5.4 per cent for total retail.
Over the same period, headline inflation reached 4 per cent and clothing and footwear prices rose 2.6 per cent in the 12 months to August, according to the latest Consumer Price Index data.
In the ABS' latest monthly spending data for August 2026, department stores saw the lowest annual growth of just 0.78 per cent, while overall retail grew 6 per cent compared to August 2025.
ARC chief economist Glenn Fahey said while the overall annual result was broadly in line with historical rates of nominal growth, there is clear divergence across the retail industry.
“Cafes, restaurants and takeaway food services continued to perform strongly, while some traditional discretionary categories were much softer,” Fahey said.
“Department stores and large online retailers recorded annual growth of just 0.8 per cent. Against inflation running around 4 per cent, this means that spending in that part of the sector is going backwards in real terms.”
Fahey warns that nominal household spending data should be viewed in the context of the elevated level of inflation in the economy, especially in terms of the challenges for retailers in managing higher fuel costs flowing through freight and supply chains.
“The climate of higher costs means the strained margins are likely to remain a defining feature as businesses move towards Black Friday and Christmas.”
Fahey said the resilience shown by the retail sector in 2026 to date could come under further pressure after the RBA lifted the cash rate by 25 basis points in September. Many are expecting the RBA will lift the rate again in November, just ahead of peak period.