David Jones is close to selling CBD stores in Sydney and Melbourne

Celebrity make-up artist Napoleon Perdis at David Jones Indooroopilly in Brisbane. Chris Hyde/Getty Images for David Jones

David Jones, now owned by South African retailer Woolworths, is close to cutting back its big CBD stores to one each in Sydney and Melbourne.

The move to sell one of two Sydney stores and one of two in Melbourne would free about $400 million in capital to reinvest back into the department store business.

David Jones chairman Ian Moir says the company decided to create the two best department stores in the southern hemisphere, one in Melbourne and one in Sydney.

“It’s fair to say that… there was significant underinvestment in the systems in David Jones,” Moir told Fairfax Media.

“We’ve come in with a different approach, and perhaps with deeper pockets, and a belief that we can transform the business through this expenditure and we’ll get a good return on this expenditure.”

The company expects to lift David Jones earnings by between $130 million and $170 million over the next five years.

And sales at David Jones have started to run ahead of rival Myer. The department store chain reported a 6.4% rise in sales for the 12 months to June 28.

Woolworths Holdings paid $2.2 billion for David Jones in August last year.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.