Woolworths sells Australia’s David Jones chain to Anchorage

Bloomberg

Woolworths Holdings Ltd. agreed to sell Australia’s oldest department store chain David Jones to Anchorage Capital Partners, ending an expensive misstep for the South African retailer.
The deal will remove about 17 billion rand ($965 million) of liabilities related to the David Jones store portfolio, Woolworths said in a statement. Management expects to get more than the carrying value of the David Jones assets when the deal concludes early next year, it said, without being more specific.
Last week, Bloomberg News reported the fee at about A$130 million ($87 milion).
Whatever the final sale value, the figure is certain to be a lot less than the A$2.2 billion Woolworths paid for the 200-year-old company in 2014. That acquisition — the brainchild of former Chief Executive Officer Ian Moir — proved disastrous and has weighed on the group ever since.
“The history here has been a painful one,” current CEO Roy Bagattini said in a conference call. “The transaction allows us to overnight improve our return on capital by several percentage points.”
The sale will also free up management to focus on other units, Bagattini said. Woolworths operates a successful South African upmarket food business — something it tried and failed to replicate at David Jones — as well as clothing stores. The retailer has five brands at its other Australian business, Country Road Group.
Having reviewed David Jones since joining from Levi Strauss & Co in 2020, Bagattini concluded the purchase didn’t make sense, with the two retailers being fundamentally different. Woolworths primarily sells own-branded goods and its Australian counterpart mostly offers other brands.