Businesses that supply Australia’s retailing grand seigneur David Jones are starting to panic. Not only has the department store delayed their payments, but they have been denied trade credit insurance to cover them if they are not paid at all.
In the already fragile discretionary retail sector, this is a significant red flag – despite commentary from the company that its long payment terms are the result of a new “payment supplier process”.
Large suppliers have confirmed that major insurance companies won’t extend them credit coverage on stock sold through David Jones. So if the department store is unable to pay for the goods, the suppliers are highly exposed to losses.
The inability to find trade credit insurance has reportedly resulted in potential new brands baulking at the opportunity to be sold at the department store, while existing suppliers already burdened with delayed payments are now re-assessing their relationships with David Jones.
A range of beauty and apparel brands including Luxe Skincare, La Mer and Gilan Beauty have now broken their exclusivity deals with DJs and will also be available at Myer, while makeup stalwart Mac is leaving David Jones altogether and defecting to the arch rival.
Suppliers said, unlike with David Jones, they had no problems arranging trade credit insurance for products supplied through Myer.
‘Our current payment schedules are complex and include numerous variations, so we’re moving towards a more consistent approach.’
David Jones’ letter to suppliers
Highly risk-averse insurance companies may be tested by more limited transparency around DJ’s finances since it is no longer a publicly traded company, having been bought by private equity firm Anchorage Capital in 2022. Its latest reported financial results were its 2024 financial year accounts, which showed a $74 million loss.
David Jones is expected to update its financial filings later this month when it reports on the 2025 financial year, but this will not cover the period covering the past nine months.
It was in mid-January this year that suppliers received a note from David Jones seeking their support for a payment deferral for money owed to them in the first week of February.
“We therefore propose paying these amounts in the first week of March 2026, at which time you will receive payment for all of January 2026 and the first week of February 2026,” the letter read.
The letter went on to explain that David Jones was standardising payment terms as part of a [business] simplification program. “Our current payment schedules are complex and include numerous variations, so we’re moving towards a more consistent approach,” it said.
But rumours began last year that the department store was struggling to pay suppliers because of a cash flow squeeze, according to a report in the Australian Financial Review, which also contained a warning from chief executive Scott Fyfe that it would not return to profit in the 2025 financial year.
Fyfe was unavailable to comment on current trading conditions on Tuesday. A spokeswoman for the retailer said this week that “retail is cyclical, and David Jones is well positioned to navigate current trading conditions while continuing to innovate and invest for the future. David Jones has a proud heritage, and we are very confident about our future.”
But suppliers are concerned that the proud heritage of the 188-year-old department store may be of little consequence to Anchorage. They worry that its pragmatic private equity masters won’t be inclined to save a business that accrues mounting losses.
The apparent troubles at David Jones come as consumer confidence has been rocked yet again over the past month by inflation fears, as Donald Trump’s war against Iran pushes up oil prices, which in turn feed into higher prices for goods around the world.
The other arm of the pincer gripping department stores like DJs is their structural decline, as they contend with luxury brands opening their own stores and consumers shopping online.
This isn’t a good time for any retailer to foment fear among its suppliers.
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