Woolworths is selling its Australian David Jones unit to private equity fund, Anchorage Capital Partners, finally walking away from the upmarket department chain after years of underperformance.

The South African food and fashion retailer paid a big premium to bulk up in Australia via David Jones as part of former Chief Executive Ian Moir’s ambitions to turn Woolworths into a leading force in the southern hemisphere.

But overhauling the 185-year-old department chain - hobbled by a glut of physical stores, inflexible leases and a weak online business - took longer than expected, forcing Woolworths to keep writing down the value of the unit.

Woolworths also tried to replicate its successful South African food business in David Jones without success.

Moir's successor, Roy Bagattini, sought to improve David Jones' performance by restructuring its balance sheet through a property sell-off, closing underperforming stores and cutting costs while strengthening its online business.

"The strategic rationale at the time of the acquisition did not materialise to the extent originally envisaged," Bagattini said in a statement on Monday.

"While David Jones has successfully executed on its turnaround, notwithstanding the Covid-19 disruptions, now is the right time for the business to operate under new ownership."

Bagattini told reporters on a media call that the transaction terms around pricing of the deal remain confidential, but that management expects to realise value in excess of the carrying value of the David Jones assets.

Shares in Woolworths hardly reacted to the news, reflecting investor expectations of the move. By 0834 GMT shares were up 1.54%.

Citing people familiar with the matter, Bloomberg reported last week that David Jones would be sold for A$130-million, while the Financial Review put a price of A$100-million.

Woolworths Holdings, which has no relationship with Australian supermarket chain Woolworths, paid A$2.1-billion for David Jones in 2014.