David Jones has more than half its value since it was bought five years ago after its South African owner struck another $437.4 million from the value of the department chain.
Woolworths Holdings, which paid $2.2 billion for the up-market stores in 2014, said in a trading update to the Johannesburg Stock Exchange it has now reduced the value of David Jones to $965 million.
It also made a $22.5 million provision against stores with onerous leases.
“The impairment reflects the economic headwinds and the accelerating structural changes affecting the Australian retail sector as well as the performance of the business, which has fallen short of expectations,” Woolworths Holdings said in a statement.
“The WHL Board believes that the valuation of David Jones is realistic and reflective of its prospects.”
It is the second major non-cash impairment made against David Jones in two years following a $712.5 million writedown that Woolworths Holdings also attributed to a broad retail downturn.
The chain last month also announced it was shedding 120 jobs from its head office and suburban store network as the department chain refocuses its investment on digital and online retail.
The update follows NAB economists’ declaration in June that the country’s retail sector was “clearly in recession” with few indications that general business conditions will improve soon.
David Jones’ sales for the last full financial year fell 0.4 per cent on a comparable stores basis, but comparable sales rose 0.9 per cent in the first half of FY19.