The Australian retail sector is on notice to lift its game as administrators try to save David Jones after reassuring staff about their entitlements.
The 188-year-old retailer has plunged into voluntary administration and receivership after falling behind on its rental payments and ongoing issues with its day-to-day business.
But it's not the only one struggling in the environment of high interest rates and higher supply chain and transport costs due to the war in the Middle East.
"Margins have been squeezed, profitability has been squeezed and we've seen elevated insolvencies," Australian Retail Council head Chris Rodwell said on Tuesday.
"But whether you're a bricks-and-mortar retailer, or online, it's still up to retailers to have a great offer and to deliver value to every Australian."
David Jones' demise was accelerated by issues with its major landlord, but it was already drowning in costs, a highly competitive market and a lack of unique offerings, despite its large retail footprint.
"It played a huge role in Australia's retail history and we hope, going into administration, that they'll play a big role in Australia's retail future," Mr Rodwell said.
But there has been some good news, after customers flooded David Jones's 37 Australian stores in record numbers in what the receivers described as a show of support and "love" for the world's oldest department store trading under its original name.
David Jones has 6000 retail workers represented by the SDA union, which is calling for jobs and entitlements to be protected.
In a letter to staff, the three receivers from FTI Consulting said it was "business as usual" while they reviewed the group's financial position and operations.
"Wages and other applicable entitlements for ongoing employment during the receivership will continue to be paid by your employing entity while you continue to work for David Jones," they wrote in the letter to staff dated Friday and released on Tuesday.
Any wages or payments owed before the administration will "generally" be paid out before other David Jones creditors, as required under federal statutes.
"Our current expectation is there will be sufficient realisations to meet your entitlements in full," the receivers said.
Workers have been told that David Jones' woes will mean a restructuring of the business, via a sale or a recapitalisation, and that it was "likely there will be steps to reduce the retail footprint in the near term".
That could depend on certain store tenancies being terminated, as has already been widely speculated, or an internally driven reduction in physical floor space at existing sites.
David Jones creditors include suppliers, concession holders and landlords, including Scentre which owns the Westfield shopping centres where 17 of its stores are located.
Scentre has not been paid rent since the end of September, while Vicinity Centres, which hosts four David Jones stores, is owed $2.2 million.
The first creditors' meeting is expected to be held by or on November 17.
Expressions of interest to buy the business must be filed by close of business on Friday, with the administrator already fielding approaches from local and international prospects.
David Jones last changed hands for just under $100 million in 2023, when it was sold to Anchorage Capital Partners by South Africa's Woolworths Holdings following its $2.1 billion takeover in 2014.
The retailer posted a $95.5 million loss in 2024/25, on top of a $74 million loss in 2023/24.
The accounts for 2025/26 are still to be filed with the corporate regulator.
