David Jones received emergency funding from senior lender Hilco Global after breaching a loan covenant, as a $95.5 million pre-tax loss pushes Australia’s oldest department store chain to the edge.

The cash injection keeps stock flowing ahead of the peak Christmas trading quarter following a drop of nearly 9 per cent in full-year sales across the network.

UK special situations investor Hilco Global stepped in as the retailer’s primary lender in July, backing owner Anchorage Capital Partners. Instead of calling in the facility after the covenant breach, Hilco provided additional funding beyond its existing agreement.

The capital injection arrives at a critical juncture for chief executive Erica Berchtold. Department stores book the bulk of their annual margin between November and January, making inventory financing indispensable.

Supply chain relations have deteriorated following months of speculation over delayed supplier settlements. A $250 million network overhaul failed to reverse declining store traffic, leaving the business short of liquidity to support seasonal merchandise orders.

“Hilco has funded above the agreed facility to allow David Jones to increase stock holdings ahead of the busy Christmas trade and sales period. Hilco remains supportive of the business,” a company spokesperson said.

Hilco’s decision temporarily protects the business from administration. Even so, the lender now holds use over the company’s operational assets and real estate positions.

Brand owners are taking floor space back into their own hands across the Australian market. Country Road Group confirmed it will eliminate almost 100 of its 283 concession pads across David Jones stores, covering labels including Country Road, Witchery, Mimco, Politix and Trenery.

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