David Jones' South African owner Woolworths will take a A$713 million ($783m) writedown on the value of the department store chain as Australia's tough retail market bites harder into the business.
Woolworths has told the Johannesburg Stock Exchange that it will take a A$712.5 million non-cash impairment on the carrying value of David Jones in recognition of "the cyclical downturn and structural changes that have impacted performance across the Australian retail sector".
"The impact of these changes has been exacerbated by poor or delayed execution in certain key initiatives," Woolworths said in a statement.
However the South African group, which also owns Country Road in Australia, said it was committed improving David Jones and would continue to invest in the business.
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David Jones opened the doors to its Wellington store in July , 2016. Its first New Zealand store on Lambton Quay is in the building that once housed the Kirkcaldie & Stains department store.
In July 2015 Kirkcaldie shareholders voted in favour of Australian department store chain taking over the lease on its upscale Wellington store and paying A$400,000 for use of the name. David Jones turned down an offer to buy the retail fixed assets for $500,000, which were subsequently valued at zero.
The retail giant, which sells high-end fashion brands and labels, reportedly spent more than $20 million on refurbishing the old Kirkcaldie & Stains store.
In June last year the Herald reported that staff at David Jones had told a New Zealand retailer of plans to open in Auckland.
David Jones has made no official announcement but the insider told the Herald the chain planned to open its second New Zealand store in Newmarket.
Woolworths earlier this month announced David Jones' sales for the six months to December 24 were down 3.3 per cent, on a same-stores basis, on the preceding half year.
The company cut David Jones' retail floorspace by 2.2 per cent during the 2017/18 first half as part of an ongoing "space optimisation" program and in 2016 sold the retailer's Market St, Sydney, building to Scentre Group.