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David Jones closes historic Melbourne store in tough conditions

David Jones is set to shut its iconic Melbourne menswear store. Source: Getty
David Jones is set to shut its iconic Melbourne menswear store. Source: Getty

Department store giant David Jones has unveiled plans to close its menswear building in Melbourne’s Bourke Street Mall, in a bid to inject the proceeds into its other stores.

The retailer is expected to reap around $500 million, Sydney Morning Herald reported, and will use it to pay for a revamp for its larger main store, also in Bourke Street Mall.

The strategy is similar to what the retailer did in Sydney, where it sold its 77 Market Street store for $360 million in 2016 to pay for a $200 million facelift of its Elizabeth Street flagship store.

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The announcement follows South African parent company Woolworths Holdings’ revelation last month that David Jones’ floor space was to be slashed 20 per cent by 2026.

Woolworths Holdings’ chief executive, Ian Moir, said the refurbished Melbourne store would be ready by 2021.

"The sale of 299 Bourke Street will allow us to deliver a more integrated retail experience to customers in Melbourne’s CBD," he said.

"A single-store flagship housing the best local and international brands in one world-class destination will create a more seamless and cohesive experience for our customers."

Tough retail conditions see profits slump

The refurb could be a strategy by the Australian retailer to recoup some of its $437 million losses this year.

Woolworths Holdings’ latest downgrade meant David Jones was worth around $965 million as of 30 June - less than half of what the parent company paid for it five years ago.

The department store’s 2019 annual profit dropped 42 per cent, with its gross profit margin for the year to June 30 also down 1.1 per cent.

In July this year, David Jones also announced it would slash 120 jobs across its head office and store network, in a bid to prioritise digital and online growth opportunities over its bricks and mortar business.

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