David Jones - billed as the house of brands, still feels like a house of cards.

The war between David Jones and its suppliers has become so extreme that the owners of Platypus Shoes and Athlete’s Foot, Accent Group, threatened to exercise its default rights against David Jones after enduring many months of overdue payments.

Typically, this “default right” would involve legal action or even a winding up order against David Jones - one which could open the floodgates to an avalanche of suppliers that have been waiting for payments.

Faced with Accent’s hardball game of chicken, David Jones swerved and paid the group which is now supplying on a cash on delivery only basis.

It also emerged last week that David Jones was proposing to lengthen its payment times for suppliers, offering many suppliers a 20-week payment schedule.

Under this plan, the early payments are small and regular but instalments ramp up each month. In theory most suppliers will receive what they are owed by November or even December.

Most of the department store’s suppliers are still waiting for at least some of their money.

But not all suppliers are equal, and the smaller ones are unlikely to get the same deal as the larger and more important ones. The smaller suppliers have less leverage given David Jones is more important to their business than their business is to David Jones.

Last week, this masthead also revealed that designer labels including Effie Kats, South Australian founded Acler, Significant Other and Aston Studios have left their contracts with David Jones to sign exclusively with Myer, while R.M. Williams ended its relationship with David Jones nine months ago.

The instalment schedule for suppliers does not support the view that David Jones is even close to financially robust.

The department store declared in April that its business had turned the corner from the sustained losses of the previous years to post a profit in the nine months to March this year.

But consumer sentiment has fallen off a cliff in recent months thanks to higher interest rates, petrol prices and a fall in house prices and the profits of discretionary retailers are under renewed strain.

Myer has already warned that retail conditions have deteriorated since May and the run-up to Christmas will be a discounting bonanza for shoppers - one that will eat into the profit margins of retailers.

In June David Jones replaced its incumbent chief executive, Scott Fyfe with Erica Berchtold and had found a new financier, Hilco Capital.

Suppliers had hoped that the Hilco refinancing would result in immediate payment of amounts outstanding.

Instead, suppliers are still effectively bankrolling the department store.

Berchtold characterised the payment plan as a reset of the business - which would help to modernise and reinvigorate the business and put it on a stronger footing.

But Berchtold instead seems to be juggling thousands of supplier deals to avoid derailment.

It would involve significant athleticism on her part. She needs to ensure major suppliers are willing to provide summer stock to avoid empty shelves or the loss of previously exclusive suppliers.

She cannot afford to deviate from the 20-week payment schedule, even if David Jones retail sales deteriorate.

Suffice to say David Jones’s owner, Anchorage, will be holding its breath for this week’s interest rate decision for a steer on whether we have reached ‘peak interest rates’.

There is a school of economists that predict rates won’t go higher but also that rates won’t fall until next year

There is another equally populated school that says there is one more rate rise coming down the pike.

David Jones suppliers, who are watching their bank accounts each week to see whether their payment lobs, will also be listening very closely to the speech from the Reserve Bank.

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