The loss of 28 jobs from the Wollongong David Jones store is part of a nationwide job slashing exercise by the retailer, described as "devastating" by the workers' union.
About 120 jobs will go Australia-wide, it has emerged, with the Wollongong store the worst hit.
The once-mighty department store chain is undertaking a "transformation" in response to years of sagging earnings.
The job losses took Wollongong workers by surprise. NSW secretary of the retail workers' union, the SDA, Bernie Smith, said the redundancies would have an impact beyond the immediate workforce.
"The SDA is providing as much support as possible to impacted workers during this incredibly difficult time," Mr Smith said in a statement on Friday.
"Every job loss is difficult, but when it's a job in a regional town and there aren't the range of other job opportunities available in the area, it's particularly tough.
"Job losses like these don't just impact the worker themselves, they impact their family and the wider local community too."
The SDA said it had acted to seek voluntary redundancies, and additional payments for longer-serving employees beyond the EBA limit of 24 weeks' pay plus five weeks' paid notice.
"While we didn't get the voluntary redundancies we did secure some additional payments for older, long serving employees," the SDA said. "Now we will work closely with our members to resolve individual concerns, see if they want to accept the redundancy, explore any redeployment opportunities or challenge any aspect of the process where there are issues."
At least two workers made redundant had been at DJs for more than 40 years.