David Jones's South African owner Woolworths will take a $713 million writedown on the value of the department store.
The writedown follows its $2.1 billion investment in David Jones in 2014.
It has blamed the writedown on tough retail conditions and poor execution of several initiatives at the department store.
This includes its underperforming private label fashion labels.
The management of these lines is set to shift from South Africa to the Country Road Group team in Australia.
"Today’s write-down reflects tough and unprecedented trading conditions, a cyclical downturn and structural changes that have impacted performance across the Australian retail sector," Woolworths said.
"This impairment has been exacerbated by delays and poor execution in certain of our key initiatives at David Jones."
David Jones' comparable sales fell 3.3% in the six months to December 24.
While they improved 0.6% in the last six weeks of the half, the department store's profit dived 30% last financial year.