David Jones says can't rule out Harris Scarfe bid

David Jones says can't rule out Harris Scarfe bid

Upmarket Australian retailer David Jones Ltd said on Wednesday it was unlikely to be a serious bidder for failed discount chain Harris Scarfe Ltd , but would be interested in checking out its assets.

"I don't think we would be serious buyers, I just think that we should have a look and see what's there," David Jones chief financial officer Brian Hills told Reuters.

"There are only 11 (operations) classified as department stores in Australia... if one of the 11 gets into trouble, it would be negligent of us not to have a look," he said.

Harris Scarfe, which appointed voluntary administrators this month after discovering serious financial irregularities, was on Wednesday formally advertised for sale, with expressions of interest called for its business assets and undertakings.

Hindal Corporate, the investment bank charged with selling the 35-store national retailer, said last week it wanted to sell the group as a whole but did not expect bids from upmarket retailers like David Jones and Coles Myer Ltd .

Hills said Hindal was "probably right", noting Harris Scarfe traded in a completely different demographic to David Jones, with an unappealing "mish-mash" of different sized store formats.

David Jones would also not be interested in Harris Scarfe's new dstore online retail business, as it had its own, he said.


But he said there could be synergies in accounting and information technology operations - although not in merchandise buying - and there was "probably a value to the brand", particularly in Harris Scarfe's South Australian base.

"Being a retailer and a department store operator, we should have a look, shouldn't we?" he said.

"That's not to say we're interested in acquiring it, but we should at least understand what it is."

However Hills said there was no way David Jones could integrate Harris Scarfe stores into its own.

"You would have to (keep them completely separate). You couldn't rebadge them, it would destroy our brand," he said.

Administrators appointed to Harris Scarfe have said the company's assets were overstated by at least A$46 million and a number of its stores were apparently unprofitable.

Hills said he believed the 150-year old chain, which underwent a major expansion in the 1990s, had a chance of surviving because it operated in a niche market, but some stores would probably have to go - most likely the three operating without critical mass in Queensland and New South Wales.

"I think the operation could survive, not in its current format though, probably slimmed down a bit," he said.

Hills would not be drawn on likely bidders for the assets, but said he did not expect big offshore interest.

David Jones was trading down two cents at A$1.04 at 1:05 p.m. (0205 GMT) in an overall market up about 0.5 percent.

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