Woolworths to finance Australian brands David Jones and Country Road separately

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David Jones' sales to decline by 35.8% in the eight weeks to end-April.
David Jones' sales to decline by 35.8% in the eight weeks to end-April.

Food and clothing retailer Woolworths has announced that it will be financing Australian brands David Jones and Country Road separately. 

This comes after the conclusion of the sale of the David Jones Elizabeth Street property in Sydney, Australia, which the group announced on Friday.  

The retailer said the proceeds of the property sale have been applied towards the repayment of debt in Australia, in accordance with the Woolworths board's review of the capital structure of the Australian entities.  

Woolworths previously said the property would be sold for A$510 million (around R5.6 billion) and has not confirmed if this is the price the deal was concluded at.  

"The property sale and refinancing have facilitated the separation of the combined Australian debt and financing facilities of the David Jones and Country Road groups, inclusive of the termination of the cross-guarantees between the two groups," said the group in a statement to shareholders.  

"The David Jones and [Country Road] groups are now financed separately, save for immaterial support from David Jones to [Country Road] as a result of the total proceeds of the property sale being received in David Jones." 

In August, then recently appointed CEO Roy Bagattini said Woolworths had been weighed down ever since acquiring David Jones six years ago. The group said it had a plan to turn around its fortunes.

At the recent results presentation Bagattini said there has been a key focus on strengthening the Woolworths' balance sheet. He also assured shareholders that Woolworths has provided no additional funding to David Jones and Country Road.  

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