Woolworths takes $713m hit on David Jones writedown

DavidJonesDavid Jones’s South African owner Woolworths will take a $713 million writedown on the value of the department store chain as Australia’s tough retail market bites harder into the business.

Woolworths has told the Johannesburg Stock Exchange that it will take a $712.5 million non-cash impairment on the carrying value of David Jones.

“The re-assessment of the carrying value of the David Jones assets has now been completed and a non-cash impairment charge of A$712.5m will be recognised,” Woolworths said.

“This reflects the cyclical downturn and structural changes that have impacted performance across the Australian retail sector.

“The impact of these changes has been exacerbated by poor or delayed execution in certain key initiatives.”

Woolworths said its board is “committed to the transformation of David Jones, the resolution of executional issues and will continue to invest in the business”.

The retail conglomerate earlier this month announced David Jones’ sales for the six months to December 24 were down 3.3 per cent, on a same-stores basis, on the preceding half year.

In its trading update, Woolworths said David Jones´ sales performance improved in the last 6 weeks of the half, with sales increasing by 0.6 per cent in comparable stores.

Woolworths-owned Country Road Group (CRG) sales increased by 5.2 per cent.

Spending in department stores fell 1.1 per cent, down 1.14 per cent year-on-year, according to the latest Australian Bureau of Statistics data for November.

Meanwhile a record number of adult Australians took to online retailers and department stores for their Christmas shopping in December 2017, according to Nielsen.

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