DJs reports modest growth despite flat February and March

By Adam Coleman
Sydney: David Jones has released its third quarter sales figures, revealing only modest growth, however the department store chain anticipates a mild improvement in consumer sentiment and stronger sales growth next year.

“While external economists broadly believe that the overall trend of the retail cycle is positive, the timing of this upswing is still unclear,” the company said in a statement to the ASX.

There are a number of recent external economic factors such as interest rates, petrol prices, tax cuts and consumer confidence that influence retail sales.

The company has maintained its previous profit forecast for the second half of 2006 and expects profit after tax growth to be at the lower end of its five per cent to 10 per cent target growth range.

David Jones reported sales revenue of $402.8 million for the third quarter of the 2006 financial year from the 29 January 2006 to 29 April 2006, representing 3.3 per cent growth on the third quarter 2005 ($390.0 million).

“We were pleased with our third quarter sales performance. As stated at the first half of 2006 results announcement, sales growth was flat in February and March,” David Jones CEO, Mark McInnes said in the statement.

“In the last five weeks of the quarter however, trading improved as we leveraged the late Easter trading period to deliver a better than expected third quarter sales growth result.

“We were particularly pleased with the performance of our Womens, Mens and Childrens Apparel, Footwear, Accessories, Cosmetics and Home Entertainment categories, all of which delivered solid sales throughout the quarter,” McInnes said.

Throughout the quarter David Jones has continued its strategy of concentrating on managing gross profit margins, generating further cost efficiency savings and effective management of inventory.

“The clearance period is the key trading period for the winter season. While our trading to date has been better than expected, we are a trading business and need to see the results of clearance before commenting further on our profit outlook," McInnes said.

“Our key refurbishments have been timed to coincide with the strengthening retail cycle.

"Our first floor Elizabeth St store ‘Young Fashion’ destination is complete and customer response has been outstanding.

We are now underway and well on track to completing the refurbishment of our ground floor cosmetics and accessories hall in our Bourke St, Melbourne store by late October 2006. Our new QueensPlaza store in Brisbane is now expected to be completed in the third quarter of calendar 2007,” he said.


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