The international retailer is pulling the pin on its high-end T Galleria store, which sells luxury brands across two floors of the redeveloped O’Connells building.
DFS Group’s new-concept store — occupying about 1800sqm — opened less than three years ago.
In an email seen by the Otago Daily Times, an Auckland-based buyer for DFS New Zealand tells business partners: "It is with a heavy heart that I share with you the news that as part of a strategic review of our global store network, DFS has made the decision to end our operations in Australia and NZ."
The email says the last day of trading for DFS Australia’s Sydney store will be September 10. For the Queenstown and Auckland stores it is September 30.
DFS Group has stated it is intensifying its focus on its Asian heartland and said its first-quarter performance was "again held back by prevailing international conditions".
It faced particular challenges in its Macau and Hong Kong "heartlands", including modest levels of visitor traffic from mainland China to Macau and foreign exchange strains, and was also retrenching in Europe.
When DFS Group, hailed as the world’s leading luxury travel retailer, signed on to take over two floors of the O’Connells building in early 2021, during Covid and when it was still under redevelopment, it was seen as a major coup for landlord Skyline Enterprises and Queenstown.
At the store’s opening in October 2022, a DFS Group Oceania vice-president told the Otago Daily Times the group "follow where the travellers go", and Queenstown had long been a desired location.
He was also grateful to Skyline for its support.
Skyline chief executive Geoff McDonald said DFS Group pulling out of its 15-year lease was "a blow".
"Look, you feel for them. They’ve actually been great partners, really."
To have secured DFS for two floors during Covid "was obviously ideal at the time".
Mr McDonald said he found out DFS was leaving about two weeks ago.
"We were quite shocked, like everyone else, but the more we thought about it, we thought there’s some opportunity in this for us.
"Our view is it’s sad and disappointing, but one door closes and another one opens.
"We think there’s an opportunity to look at a kind of mix of brands in there that will appeal a bit more to locals."
Mr McDonald said he could not count on one tenant taking the entire space again.
"Some of the existing brands might want to stay and then without doubt we’ll be looking to bring others in."
It would also look for international brands.
There was also a chance for a retailer to take street frontage and occupy the level immediately above.
"We aim to obviously get a couple of key tenants and then the others tend to follow."
Mr McDonald
said the CBD was becoming more attractive for retail.
