THE grand dame of high end fashion, David Jones will not to renew its lease at the Westfield Eastgardens shopping centre in Sydney's eastern suburb.
Westfield Eastgardens is owned by Terrace Tower Group and
David Jones’ chief executive Mark McInnes said following negotiations with
“Whilst we would have liked to enter into a long term Eastgardens lease, the terms proposed by the landlord are not in the best interests of our shareholders,” he added.
David Jones has been at Westfield Eastgardens since it opened in 1987 to much fanfare as the largest shopping centre in
David Jones is the major tenant occupying some 10,000 sqm of space and is the only high end fashion department store at the centre.
McInnes said the retailer was not prepared to enter into long term leases in the hope of chasing top line sales growth, if the terms of the lease do not deliver bottom line profit growth and economic value over the life of the lease.
“In our view entering into a lease on the terms proposed by
“The profit that would be generated under the proposed terms of the lease will be captured as we transfer David Jones’ customers to our Bondi Junction and Sydney CBD stores. This can be achieved at a vastly reduced investment on David Jones’ part in comparison to renewing the lease on the terms proposed,” he added.
In addition, McInnes said based on research, the primary Eastgardens trade area covers Eastlakes, Daceyville, Matraville, Maroubra, Mascot, Botany, Chifley and Banksmeadow, however, the David Jones Eastgardens generates less than half of its sales from customers in these suburbs.
“The majority of sales are derived from customers outside this primary catchment area.
“Based on extensive market research, customers who live in Randwick, Clovelly, Coogee, Kingsford, Waverley, Centennial Park and Kensington have told us that in the event that the David Jones Eastgardens store were to close, they will continue to shop at our Bondi Junction and Sydney CBD stores based on our national and international brand portfolio and the quality of our service.
“This is further evidenced by the fact that our Eastgardens store profit has been in decline since the opening of the redeveloped Bondi Junction centre in 2004,” he added.
It is not all bad news for Terrace and Westfield Eastgardens, department store Myer is expected to sign a lease at the centre.
Westfield Eastgardens is located in Pagewood, just 10 kilomere from the Sydney CBD. The centre has 78,989 sqm of GLA with approximately 277 retailers and a Hoyts six Cinema Complex as well as parking for 3,263 cars.
The centre records an annual turnover of $464.5 million.
Australian Property Journal
