David Jones has reported $391.1 million in sales for the three months to April 27, a 2.2 per cent fall from the previous corresponding period, as a mild winter impacted its womenswear business and the home categories continued to struggle.
David Jones shares plunged 12 cents, or 4.65 per cent, to $2.46 in early trade.
The department store chain said like-for-like sales dropped 3.4 per cent for the quarter.
Cutting costs … David Jones. Photo: Michael Clayton-Jones
“The unseasonably warm start to winter impacted our business, in particular womenswear,” chief executive Paul Zahra said this morning. “Our overall sales performance was once again adversely impacted by our home categories, in particular electronics which continues to be subject to industry and price pressures.”
David Jones added that it had made progress exiting and consolidating its low productivity categories and remained focused on managing its costs.
“In the current environment of cautious consumer sentiment we made a deliberate decision to continue to focus on the areas of our business that we can control namely [gross profit] margins, inventory and costs,” Mr Zahra said.
The retailer has previously stated it plans to exit the DVDs, games and music categories.
‘Discounting not sustainable’
Mr Zahra said David Jones continued its strategy of reducing its discounting program during the quarter. The store’s mid-season sale was reduced by one week, while there was no $10 million Floor Stock Clearance.
“Our view is that the ongoing increase in the depth and breadth of discounting that we are seeing in the market is not sustainable,” he said. “This is a view shared by many brands and as a result we have seen an increase in the number of brands looking to convert their distribution arrangement to department store exclusive agreements with David Jones.
“Our view is that the ongoing increase in the depth and breadth of discounting that we are seeing in the market is not sustainable,’’ Mr Zahra said.
But he acknowledged the David Jones June clearance would need to be competitive with other retailers that may start heavy discounting, due to a build up of excess winter inventory.
Last week, rival chain Myer held a ”Super Saturday” stocktake sale to lift sales and shift extra stock from some of its suppliers. Myer also last week reported a 0.5 per cent increase in sales for the three months to April 27 to $652.5 million.
Tapping Chinese tourists
David Jones will launch a partnership with UnionPay, China’s dominant payment card supplier, later this week to tap the deep pockets of rich Chinese tourists.
Mr Zahra said the partnership was a “good opportunity” given that more than 700,000 Chinese nationals visited Australia annually and the average transaction size on the UnionPay card was the highest in the world.