The Maze: Australia’s David Jones department store chain entered voluntary administration on November 5. Its shops and website kept trading under outside managers while a separate team assessed the company’s future. Some small brands were already waiting months for payment. Now they have to decide whether to send more stock while those old bills go through a separate process with no clear payout.
Source: Nick-D / Wikimedia Commons. M.J. Bale’s shop within David Jones’s Sydney flagship in January 2024. CC BY-SA 4.0, resized.
The Details:
The cash ran late before the appointment. Sydney drinkware brand Beysis told The Guardian it accepted a lower wholesale price on an April restock in exchange for payment within 14 days. The money was still outstanding months later, according to the brand. Its co-founder said the delay limited how much Beysis could spend on holiday staffing, marketing and stock. Another supplier, the woven blanket brand Slowdown Studio, said it was waiting on nearly A$75,000 and would consider supplying David Jones again if it could change the terms, for example by getting paid before delivery.
Who controls the stock matters. The Guardian reported that luxury brands including Gucci took goods off the shelves after the announcement. Some luxury labels operate concessions, or branded shops inside the department store, where they often keep control of their own inventory. Smaller brands that sold goods wholesale could have a different arrangement. The Guardian reported that some suppliers were told they could not take back products even though their invoices remained unpaid. A supplier without a legal claim over the retailer’s assets is an unsecured creditor. Australia’s corporate regulator says receivers generally have no duty to pay those suppliers’ old debts. The suppliers’ eventual recovery is still unknown.
New orders follow a different process. ABC News reported that the appointment followed failed talks with a major landlord. McGrathNicol, the administrator, is assessing the company’s future and dealing with existing claims. FTI Consulting, the firm the lender Hilco appointed as receivers to protect its loan, is running the stores and website. ABC reviewed a letter saying suppliers could open fresh accounts with the receivers and get paid for properly incurred new orders on existing terms. The bills outstanding when the receivers were appointed go through administration. That treatment applies to purchases made under the receivers’ authority.
MarketMaze Take: A new David Jones order is a fresh decision about how much credit a supplier can afford to extend. A brand may want to keep its shelf space through the holidays, but it still has to fund the goods and ship them before the new invoice comes due. The previous bill can remain unpaid throughout that period. For a brand weighing another delivery, the size of the order and the terms on the receiver-authorised purchase order matter more to its near-term cash position than the fact that the store is open.
