Too much floor
David Jones · The accounts: fixed costs · Read the study: maxnoble.com/study/0017
For the class
Tasks in Word – type the answers on a computer.
1Why do fixed costs cut both ways, and how did that show in David Jones's accounts for the year to June 2025?
2Was David Jones's problem expensive rent? Use the Westfield figures.
3Which law does the study say David Jones proves, and why?
Answers · for the teacher
No. 0017 · Too much floor
1Why do fixed costs cut both ways, and how did that show in David Jones's accounts for the year to June 2025?
Fixed costs such as rent stay when sales fall, so a small fall in sales hits the bottom line harder. David Jones's sales fell 8.7% to A$2.0 billion, underlying earnings fell 13.2%, and the loss before tax grew 29%, from A$74.1 million to A$95.5 million.
In the study: Screens: The moment, in one chart; The tool
2Was David Jones's problem expensive rent? Use the Westfield figures.
No. In the Westfield centres it paid about A$352 a square metre against an average of A$942, little more than a third. The problem was the amount of space: 17 whole department stores in Scentre's centres alone, on long leases, so the cost did not shrink with sales.
In the study: Screen: The tool
3Which law does the study say David Jones proves, and why?
Law No. 36, Shrink on Purpose Before You Shrink by Force. David Jones reportedly weighed a network of 12 to 20 stores out of 38, but needed its landlords to agree. The rent stopped after September, talks with Scentre failed on 4 November, and on 5 November administrators took the decision over.
In the study: Screens: Your verdict; The law it proves
Hand out page 1 after the reading. Page 2 holds the answers. Every answer is in the study; nothing new is added.