86-108 Castlereagh Street
Company Perspectives:
Moving forward, we are focusing on leveraging our core department store strengths into ongoing value and returns for shareholders. Our objective is to restore the investment fundamentals of the Company by positioning David Jones as a well-defined and brand oriented retail department store which delivers consistent, strong yields and steady growth.
Sydney, Australia-based David Jones Ltd. stakes the claim as the world's oldest continuously operating department store; the company's original store opened at its George Street location in 1838. The company is also Australia's third-largest department store company, with revenues of A$1.7 billion in 2003. David Jones operates more than 30 stores across Australia, although the bulk of its operations are located on the country's eastern seaboard. Nonetheless, the group has regained a presence in western Australia, with the purchase of Perth-based Aherns in 1999. David Jones no longer owns most of its properties, having disposed of the real estate in sale-leaseback agreements, a move which gave the company cash needed for a vast store renovation drive. After an attempt to broaden its reach into the mass-market in the 1990s, the company has returned to its historic focus as a decidedly upscale retailer, stocking some 120 high-end fashion brands. In addition to apparel, the company also has strong sales in furniture and home furnishings. A launch at the beginning of the 2000s of a chain of gourmet grocery stores under the Foodchain name was abandoned in 2003, at which time the company took steps to reposition its online retail venture, David Jones Online, which offers retail sales of perfume, jewelry, and other gifts.
Pioneering Success in the 19th Century
David Jones, born in Wales, arrived in the young city of Sydney, Australia, and in 1838 opened a general store catering not only to the growing population in town but also to the increasing numbers of people who chose to settle in the city's outlying areas. Jones chose the store's location wisely: a busy corner of Georges Street, directly across the street from the town's General Post Office. From the start, Jones emphasized textiles. At the same time, the store's emphasis on "the best and most exclusive goods" made it a favorite among Sydney's growing upper classes.
Jones retired, turning over the store to his business partners. Yet the new owners lacked Jones's retail touch, and the store was eventually taken over by its creditors. Jones himself came out of retirement, borrowing money and taking on new business partners in order to rebuild the store. Joining the store at this time was Jones's son Edward, who had spent some time abroad, where he discovered the newly developing European-styled "department store." Under Edward Jones, the George Street store was remodeled and expanded, and in 1887 he introduced the department store retail format to Sydney. The new store featured furniture and other household furnishings over several floors--and boasted Sydney's first hydraulic elevator. The new building also featured the company's growing mail order business, as the fame of the David Jones name spread throughout Australia.
David Jones had long relied on imports in order to stock its shelves, and boasted of items and fashions from all over the world. At the end of the century, however, the company decided to move against the high cost of imports, and in 1899 founded its own factory, on Sydney's Marlborough Street. Then one of the largest manufacturing plants in Australia, the new site supplied a wide range of goods to the store, including David Jones branded clothing. At the same time, however, the store remained one of the Australian gentry's main sources of goods and fashions from the United Kingdom and elsewhere.
The success of that operation and the company's growing retail and mail order sales led it to go public in the new century, as David Jones Ltd. In the 1920s the company began preparations to build a new store, buying a site spanning an entire block of in Sydney's Hyde Park neighborhood--a move criticized by some, given the location's remoteness from the city's main shopping district.
Construction went ahead, however, under Charles Jones, grandson of the founder, and the new store on Elizabeth Street opened in 1927. A far larger site, the new store was to remain the company's flagship store throughout its years of expansion. The opening of the site quickly attracted other retailers to the area, and before long, the Elizabeth Street store formed the core of the city's new retail center.
Postwar Fashion House
David Jones opened a third store in 1938, on Market Street around the corner from the Elizabeth street store. Such was the company's stature that then Prime Minister Billy Hughes presided over the new store's grand opening. This did not prevent the government from requisitioning the Market Street site for the Ministry of Munitions at the outbreak of World War II, however. The company continued operations at its other sites for the duration, despite rationing and the loss of a number of personnel to the war effort.
The postwar period marked a new era in the retail industry with the introduction of a new style of high fashion. David Jones soon became the fashion center of Australia, organizing its own runway shows to highlight the latest European fashions. The company's status among the fashion world was highlighted in 1948 when it brought over Christian Dior's famed "New Look" collection.
Australia's economic boom brought new fortune for David Jones, which became a key part of the Australian retail fashion industry in the 1950s. The company's growing sales, including its strong catalog sales, inspired it to expand into new regions of the country, and by 1959 the company boasted nine stores.
Initially sticking close to its New South Wales base, David Jones continued to grow during the ensuing decades, aided by the country's continued economic expansion in the 1960s. By the 1980s, the company had added stores in Queensland, Victoria, South Australia, and elsewhere. Not all of the group's expansions were successful, however. An attempt to move into western Australia, and especially the Perth region, failed in the 1970s. Faced with competition from such local stalwarts as Aherns, David Jones was forced to exit Perth at the end of the 1970s.
Nonetheless, at its height, the David Jones retail empire boasted more than 30 stores, and the company claimed the title as Australia's leading department store group. Adding to the group's growth was its acquisition of two rival chains: Georges and, more importantly, John Martins, which, centered on the Adelaide region, was acquired by David Jones in 1985.
The 1980s marked a new period of expansion for the group, as the social mood changed from the exclusivity of the 1970s to a new, more blatant focus on consumerism. Guiding that growth in the 1980s was Rod Mewing, who joined the company as director of operations in 1981. With Mewing, then just 33 years old, named managing director in 1986, David Jones underwent a new boom, becoming a magnet for a new breed of brand-conscious shoppers amid a generalization of the luxury goods market.
During the decade, David Jones began refurbishing its stores, especially the Elizabeth Street flagship store, which opened its famed seventh floor designer boutique. The company also rolled out new in-store retail concepts, such as food halls, in the 1980s. The emphasis on high-end, high-quality (and high-margin) goods in the 1980s made David Jones one of Australia's fastest-growing retailers.
It also brought the company to the attention of empire builder John Spalvins. One of a host of a new-breed of Australian tycoons, which included Rupert Murdoch, Alan Bond, and the Kerry family, Spalvins went on his own buying spree in the late 1980s, cobbling together a vast and extraordinarily diversified collection of businesses. In 1990, Spalvins orchestrated a merger among his company, Adelaide Steamship, and David Jones, Tooth & Co. and Industrial Equity Ltd. The resulting company, known as Adsteam, became one of Australia's largest businesses, with interests in a variety of industries, including the retail market; in addition to David Jones, the company controlled Australia's leading food retail group, Woolworths.
Financed by debt and pummeled by a global recession, Adsteam began to teeter from the outset. By 1992, as its losses neared A$750 million ($500 million), Spalvins had been removed from the company, and Adsteam had been taken over by its creditors. Adsteam then began selling off its assets, including the Woolworth chain, which was floated in one of Australia's largest-ever public offerings in 1993.
Focused Department Store Group in the New Century
Despite the tribulations at its parent company, the David Jones arm prospered at the beginning of the decade, continuing to outpace rival retailers. Part of the group's success was due to Mewing's decision to expand the David Jones brand range, which enabled the company to generate a new image for itself as a high-value retailer--a move that brought the company high margins as well. By 1993, David Jones's revenues had risen to A$1.3 billion.
Mewing left the group in 1994 as Adsteam prepared to spin off David Jones as public company. In Mewing's place came Chris Tideman, a retailing veteran brought in from England. Tideman brought David Jones through its well-publicized public offering (IPO), an event that included wrapping the Elizabeth store in the company's trademark houndstooth fabric. Valuing the company's 33 stores, including a number of John Martins stores, at some A$750 million, the company's stock was priced at A$2 per share. Shares were marketed in part as an opportunity for the country's "mum and dad" investors to grab a piece of Australian retailing history.
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