David Jones H1 profit down 14pc as sales slide and spending rises

    by: Gavin Lower
    From: Dow Jones
    March 20, 2013



UPMARKET department store operator David Jones today posted a 13.5 per cent fall in fiscal first-half profit, as sales fell and it ramped up spending to win back customers.     :'( 

David Jones, said net profit for the six months to January 26 totalled $73.5 million. Sales totalled $1 billion, down from the pervious year's $1.01bn.

"We are confident the investment we are making will provide us with a strong sustainable business capable of addressing the retail structural changes currently taking place and positioning us for long term success," chief executive Paul Zahra said in a statement.

David Jones has suffered from a trend of Australian shoppers moving away from the high street to look for cheaper goods online. At the same time, cautious consumers have limited discretionary purchases amid an uncertain outlook for the economy.     :'(


In the middle of last year, management also faced the distraction of handling a $1.65bn takeover approach by a mysterious British entity, which sent shares in the department store chain up as much as 18 per cent before the offer was quickly withdrawn. A regulatory investigation by the Australian Securities & Investments Commission into disclosure and trading in David Jones stock followed.

However, a string of interest rate cuts by the Reserve Bank of Australia since November 2011 aimed at boosting non-mining sectors of the economy such as housing and retail is showing signs of working. Reports this month showed consumer confidence at a two-year high for the second straight month in March, and house prices rising sharply in the fourth quarter of last year.

Myer, Australia's biggest department-store chain by market value, last week posted a higher first-half profit citing a surprise uptick in sales, which have now risen for three consecutive quarters.

David Jones said it would pay an interim dividend of 10c a share, slightly lower than the previous year's 10.5c.

There's no other prices like David Jones either.     :( 

Carbon Tax and old fashioned IR are to blame for falling profits and business failures putting people out of work and stopping those employed from finding work

David Jones threatens to walk away if landlords don't give it a break. 

    by: Jane Harper
    From: Herald Sun
    March 20, 2013


DAVID Jones has threatened to close a string of stores over the next five years unless landlords agree to slash rents.     :-?

The retail group, which has struggled with rising costs and poor consumer confidence, says it is not afraid to walk away from its weaker stores if it cannot negotiate favourable leases.

Six stores are in the gun across every mainland state except Western Australia, chief executive Paul Zahra says.     :(

The hardline approach struck a chord with investors, who send the stock soaring 4 per cent to a 16-month high of $3.08 despite a 13.5 per cent slide in first-half profit.

The closure threats echo those made by rival Myer last year.

Mr Zahra said he was confident sales from axed stores would migrate to other outlets or to the group's revamped online business.

He said stores in the firing line - including Glen Waverley, three in NSW, and one each in Queensland and South Australia - were profitable but in less-appealing areas.


"We are being very hard-nosed about it," Mr Zahra said. "If we take a futuristic view then, if these leases do not meet our requirements we will not renew them."

It came as the high-end retailer reported a profit of $73.5 million for the six months to January 26, down from $85 million a year ago.

While the result beat analysts' broad expectations, it trailed rival Myer, which last week surprised the market with a first-half profit of $87.9 million - up 0.7 per cent.

Mr Zahra said online sales in the three months to January were up 288 per cent on the same period a year ago.

"In the past 12 months we have transformed into a true multi-channel retailer capable of competing internationally," Mr Zahra said.

He also announced David Jones was rolling out its own private label products.

A kitchenware range has been introduced, and "everyday essentials" including towels, sheets, shirts and underwear are to come.

Mr Zahra said the store aimed for 10 per cent of sales from private label products by July next year, but insisted the group was not moving away from its "house of brands" strategy.

"Our range will complement our existing portfolio, not replace it," he said.

The company also announced it had appointed corporate real estate specialist CB Richard Ellis to advise on ways to generate extra income from its two stores in Sydney's centre.

David Jones owns the stores, along with its Bourke Street Mall stores, with the portfolio valued last year at $612 million.

REPORT CARD     :(

FIRST-HALF RESULTS

NET PROFIT:

$73.5m, down 13.5%

REVENUE:

$1b, down 0.7%

EARNINGS PER SHARE:

13.9c, down 15%

DIVIDEND:

10c, down 4%

SHARE PRICE (YESTERDAY):

$3.08, up 4%

Yes, but did you cut your prices?.     :(

wrote on Mar 21^st, 2013 at 3:29am:

Yes, but did you cut your prices?.     :(

If they cut their prices, they'll have to reduce the wages they pay..

gizmo_2655 wrote on Mar 21^st, 2013 at 8:26am:

wrote on Mar 21st, 2013 at 3:29am: Yes, but did you cut your prices?.     :( If they cut their prices, they'll have to reduce the wages they pay..

Or jobs.

KJT1981 wrote on Mar 21^st, 2013 at 8:38am:

gizmo_2655 wrote on Mar 21st, 2013 at 8:26am: wrote on Mar 21st, 2013 at 3:29am: Yes, but did you cut your prices?.     :( If they cut their prices, they'll have to reduce the wages they pay.. Or jobs.

why? they sell cotton on t shirts for $50 , I can buy a cotton on tshirt from cotton on for $5 ... and yet cotton on can pay for it's staff .. why is that?

It's called a profit margin and dividends to shareholders John.

You know, capitalism and all that....

Andrei.Hicks wrote on Mar 21^st, 2013 at 8:53am:

It's called a profit margin and dividends to shareholders John. You know, capitalism and all that....

we were talking about paying staff Andrei ... Whilst I know you don't like to pay them, and you think they should work for free just to increase your dividends, this is the real world. DJ's is a rip off.... you invest in it, you deserve to get ripped off.

Quote:

If they cut their prices, they'll have to reduce the wages they pay..

That doesn't follow at all. In fact staff bonus payments, which the previous management cut out, have been restored.

The DJ point-of-sale system is really old & slow. Replacing it, as DJ is planning to do, will materially improve store floor staff productivity. It may also improve supply chain management, reducing inventory and inventory holding cost, and minimising out-of-stock situations.

Another area where both DJ & Myers have made good progress is in browbeating international suppliers to offer them the same wholesale price that is available in the US and other foreign markets. This enables the stores to compete better against internet offerings from overseas sites.

As reports already quoted indicate, DJ is also reviewing its property portfolio and rental occupancy costs.