DJs considers Innaloo over Fountain Gate

David Jones says it hopes to establish a dominant presence in Perth, after securing an option to open a new store at Westfield Innaloo.

The retailer also has a proposed new store at Westfield Whitfords.

"We are pleased with the option to open a new store at Innaloo located in the high growth, high value northern corridor of Perth," said David Jones CEO Paul Zahra.

"This coupled with our proposed new store in Whitfords means David Jones will establish a dominant presence in one of the fastest growing, high value markets in Australia," Mr Zahra said.

While the retailer has announced a planned expansion in Perth, David Jones has negotiated with Westfield Trust to terminate its lease at the proposed Fountain Gate shopping centre redevelopment in Victoria.

In June 2003, David Jones announced it had undertaken a store portfolio review and identified the future Fountain Gate lease arrangement as unviable as it was not aligned to the company's customer base or target demography.

The Fountain Gate agreement was entered into by David Jones in 1996 and was legally binding and enforceable by both Westfield and David Jones.

At the time of the Strategic Review, David Jones announced that it would commence negotiations with Westfield to attempt to terminate or, if this was not possible, at least renegotiate the terms of the existing Fountain Gate agreement.

"Whilst the terms of the Fountain Gate lease arrangements were renegotiated at that time and involved David Jones paying Westfield an amount of $9.8 million, David Jones has continued to seek to exit from this lease and, until now, had not been able to achieve that on acceptable commercial and strategic terms," it said in a statement.

Under the arrangements agreed with Westfield, David Jones will receive the value in excess of the payment made to Westfield in 2003 when the Fountain Gate lease was re-negotiated, adjusted for inflation.

The value over the $9.8 million, adjusted for inflation, that David Jones receives from Westfield will come as capital expenditure in projects in Westfield centres, including Kotara in Newcastle and Innaloo.