DJs bucks retail trend, increases profit forecast

By Chris Nicholls

SYDNEY: David Jones has almost doubled its profit forecast for the second half of the 2009 financial year, putting it down to forward planning, inventory management and cost cutting programs.

In a statement to the Australian Securities Exchange (ASX), the retailer said it expected Profit After Tax (PAT) to rise 20 to 25 per cent rise over results from H207, as opposed to original forecasts of eight to 13 per cent growth.

David Jones said this would mean expected profit would rise to $46 – 48 million.

Full year guidance also increased, albeit slightly, to $135 to 137 million, up from the original $130.5 to 132.5 million forecast.

In a late piece of reporting, DJs also announced total sales revenue of $962.4 million for H208, up 1.7 per cent on the same time last year.

Like for like sales growth came in at 1.5 per cent.

David Jones chief executive, Mark McInnes, claimed the increases showed strong management principles.

“Our increased profit after tax guidance is indicative of our ability to manage our business throughout the economic cycle, in particular in times of slower consumer spending, which we have experience in Q308 and particularly Q408,” he said.

McInnes also said the company’s plan for dealing with any economic slowdown, first put forward 18 months ago, had ensured that “each key component of our business was prepared for a soft retail environment”.

Inventory management also played a strong part, he said, with orders 12 months ago factoring in flat H2 sales growth.

“We ensured more than 12 months ago that we ordered for flat sales growth in H208 and we utilised the month of July to clear out any remaining surplus winter stock. We are now in the position of our year-end stock in 2008 being eight per cent lower than in FY07, which means we have a very clean inventory position entering FY09,” said McInnes.

David Jones also revealed its Doncaster store was on track to open in October this year as part of a $600 million redevelopment of the Westfield centre.

The two Sydney CBD stores’ upper floors, the whole Bondi Junction and Robina, Queensland, stores will also have refurbishments before Christmas, McInnes said.

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