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%
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Pages: 1
There's No Other Store Like David Jones (Read 1358 times)
