The Max Noble 5 Minute Study · No. 0017
The Morning Brief Edition · The accounts: fixed costs
Too much floor
David Jones paid little more than a third of the average Westfield rent per square metre, and still fell behind on the rent. One tool shows why: fixed costs.
Tool: The accounts: fixed costs · ready for class, with a teacher pack
By Max Noble · 10 November 2026 · 5 min read
The idea
Sydney, 24 May 1838. A Welshman who arrived three years earlier opens a shop where George Street meets Barrack Lane. The register of firms lists his trade as “drapery, furniture and general outfitting”.
His name was David Jones. On Thursday 5 November 2026 the company that still carries it entered voluntary administration.
Here is the puzzle. In the Westfield centres it paid little more than a third of the average rent per square metre. It still fell behind on the rent. This study shows you why in five minutes, with one tool: fixed costs.
The company
The name over the door since 1838
David Jones runs 38 department stores, 37 in Australia and one in Auckland, with about 6,000 staff.
It sold about A$2 billion of goods (about DKK 9.3 billion) in the year to June 2025.
Since 2023 it has belonged to the investment firm Anchorage Capital Partners.
The promise
“A southern hemisphere champion”
On 9 April 2014 Woolworths Holdings, the South African retailer, agreed to buy David Jones for A$2.1 billion (about DKK 9.8 billion). Its chief executive, Ian Moir, made the promise:
“We look forward to growing a southern hemisphere champion from our South African base.”
The plan promised at least A$130 million a year of extra operating profit (about DKK 607 million) within five years.
On 19 December 2022 Woolworths’ chief executive, Roy Bagattini, announced the sale and gave the verdict himself: “The strategic rationale at the time of the acquisition did not materialise to the extent originally envisaged.”
That is the most expensive sentence I have read this year.
The moment
A$2.1 billion in, A$92.5 million out
The sale closed on 27 March 2023. Woolworths’ own results put the total price at about A$92.5 million (about DKK 432 million). Woolworths kept the Bourke Street flagship in Melbourne and leased it back.
The new owner put about A$250 million into the business, Ragtrader reports. The losses kept coming.
Then the rent stopped. Scentre Group, owner of the Westfield centres, says David Jones paid no rent after 30 September. David Jones offered to close nine of its 17 Westfield stores and swap A$45 million of bank guarantees for a stake in the business, Forbes Australia reports. Scentre said no.
On 5 November the directors called in McGrathNicol as administrators. Hilco, a lender, sent in FTI Consulting as receivers. The stores keep trading while the administrators look for a buyer or new money.
The moment, in one chart
The loss grew faster than the sales fell
Years to the end of June. Accounts filed with the corporate regulator, as reported by The Nightly (28 Apr 2026). Kroner at A$1 = DKK 4.67 (5 Nov 2026).
Sales fell by less than a tenth. The loss grew by more than a quarter.
The tool
Fixed costs cut both ways
Some costs move with sales: the goods on the shelf. Others do not: the rent, the lights, the floors you must staff. The bigger the fixed share, the harder a small fall in sales hits the bottom line. On the way down, that is what hurts.
| Year to June 2025 | Change on the year before |
|---|---|
| Sales, A$2.0bn (DKK 9.3bn) | down 8.7% |
| Underlying earnings, A$176.5m (DKK 824m) | down 13.2% |
| Loss before tax, A$95.5m (DKK 446m) | 29% bigger |
Underlying earnings as the company measures them. Source: accounts filed with the regulator, via The Nightly.
Now the Westfield figures. David Jones paid Scentre about A$352 a square metre, against an average of A$942 across its centres. Cheap. But it rented 17 whole department stores from Scentre alone. Some of its leases with another landlord, Vicinity, run to 2041.
The rent was cheap. There was simply too much of it.
A cheap square metre still costs money when too few people buy on it. Smaller was the cure. Long leases made smaller slow.
Your verdict
David Jones knew it had to get smaller and waited for its landlords to agree; now the administrators decide how small.
Share this verdict as a card →
The problem was not the price of its space. In Westfield it paid little more than a third of the average rent per square metre.
The problem was the amount. Sales fell 8.7% in a year. The loss grew 29%. The floors did not shrink with the tills. The chain reportedly weighed a network of 12 to 20 stores, out of 38.
Shrinking that much needed landlords to say yes. On 4 November the board turned down Scentre’s counteroffer. On 5 November the choice passed to McGrathNicol and FTI Consulting.
Your move
You are in the chair. Three moves.
- Put a profit on every store. I would rank all 38 by what each earns after its own rent and staff. An average across 38 stores hides the ones that lose money.
- Close by one list, once. Name every store that goes on the same day. Staff, brands and landlords can plan around one list, not a drip.
- Sell the stores that pay. Show buyers the stores that earn more than their rent and staff cost. A buyer pays for those, not for the length of the list.
The verdict and the moves are Max Noble’s analysis of the business, not investment advice.
The law it proves
Shrink on Purpose Before You Shrink by Force
David Jones carried 38 stores and reportedly weighed keeping 12 to 20. It waited for its landlords to agree, and stopped paying rent while it waited. Now administrators hold the scissors.
— Max Noble
Sources
Every figure can be traced
[1]web pageWoolworths Holdings Limited, “Woolworths South Africa to acquire David Jones to create a leading southern hemisphere retailer”, release, 9 Apr 2014: A$4.00 a share, A$2.1bn (R21.4bn) for the entire issued share capital; at least A$130m (R1.4bn) a year of EBIT within five years; Ian Moir, chief executive, “we look forward to growing a southern hemisphere champion from our South African base”
woolworthsholdings.co.za · release, 9 April 2014
[2]p. 8; p. 17Woolworths Holdings Limited, “Agreement to acquire David Jones”, investor presentation, May 2014, p. 8 (offer and equity value, “southern hemisphere retailer with meaningful scale”), p. 17 (about R1.4bn a year of extra EBIT within five years)
woolworthsholdings.co.za · investor presentation (PDF), pp. 8, 17
[3]web pageWoolworths Holdings Limited, SENS announcement, 19 Dec 2022: sale of its entire shareholding in David Jones to Anchorage Capital Partners; Bourke Street flagship retained and leased to David Jones; Roy Bagattini, “The strategic rationale at the time of the acquisition did not materialise to the extent originally envisaged”
senspdf.jse.co.za · SENS 19 Dec 2022 (PDF)
[4]p. 4; p. 14Woolworths Holdings Limited, Summary of the Audited Group Results for the 52 weeks ended 25 June 2023, p. 4 (legal completion on 27 March 2023; Bourke Street retained and leased back), p. 14 (gross total proceeds R1,129m, A$92.5m)
woolworthsholdings.co.za · FY2023 summary results (PDF), pp. 4, 14
[5]web pageMuseums of History NSW, “24 May 1838 – David Jones department store opened”: George Street and Barrack Lane; a Welshman who arrived in 1835; “drapery, furniture and general outfitting” (Register of Firms)
mhnsw.au/stories/general/24-may-1838
[6]web pageThe Nightly (Cheyanne Enciso), 28 Apr 2026: accounts filed with the corporate regulator; sales down 8.7% to A$2bn in the year to June 2025; loss before tax A$95.5m, from A$74.1m; underlying earnings down 13.2% to A$176.48m
thenightly.com.au · David Jones reveals $95m loss
[7]web pageThe Nightly (Cheyanne Enciso), 4 Nov 2026: Scentre’s trading update; 17 David Jones stores in Westfield centres; A$45m of Scentre gross rent in 2026; A$352 a square metre against a portfolio average of A$942; Elliott Rusanow, “They have not paid rent since September and therefore are in breach”
thenightly.com.au · Scentre details exposure to David Jones
[8]web pageForbes Australia (Josh Lai), 5 Nov 2026: rent unpaid since 30 September, per Scentre; the proposal to close nine Scentre stores and swap A$45m of bank guarantees for equity, rejected; McGrathNicol administrators, FTI Consulting receivers and managers; offers sought for a recapitalisation or a sale; the board turned down the landlord’s counteroffer on Wednesday 4 Nov
forbes.com.au · David Jones collapses into administration
[9]web pageABC News, 5 Nov 2026: voluntary administration; Hilco appoints Christopher Hill, David McGrath and Joanne Dunn of FTI Consulting as receivers and managers; stores and online keep trading; Erica Berchtold, “We have a well-developed plan on how to reset the business for the future”
abc.net.au · David Jones calls in administrators
[10]web pageAAP (Nick Wilson, Derek Rose) via The Canberra Times, 5 Nov 2026: 37 stores in Australia and one in Auckland; about 6,000 staff; losses of A$95.5m (2024/25) and A$74m (2023/24)
canberratimes.com.au · David Jones collapses after landlord talks fail
[11]web pageRagtrader (Christopher Kelly), “Inside the collapse of David Jones”, 6 Nov 2026: about A$250m invested by Anchorage; a network of 12 to 20 stores reportedly weighed; Vicinity leases expiring from 2029 to 2041
ragtrader.com.au · Inside the collapse of David Jones
[12]web pageExchange rate: A$1 = DKK 4.66875 on 5 Nov 2026, rounded to 4.67; all A$ figures converted at this rate
xtransfer.com · AUD to DKK history
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