Sales are down but profit is up for David Jones

By Patrick Avenell

SYDNEY: Despite a drop on total sales revenue, David Jones Limited today announced a 2.4 per cent increase in profit after tax for the first half of the 2009 financial year. In total, David Jones reported a $91.2 million profit, up from $89 million for the corresponding period last year.

David Jones CEO Mark McInnes attributed the profit growth to the group’s proactive positioning for the current economic crisis, a program that was set up three years ago.

“Throughout FY06 and FY07 we utilized the strong economic environment to plan an impending downturn,” he wrote to the ASX.

“Over this period we completed significant structural changes to our business to ensure our company: continued to generate strong cashflows, had low debt levels… and was able to continue to deliver profit after tax growth and dividend growth in a downturn.”

Some of micro points McInnes isolated for attribution for the positive result include a loyal customer base, strong service ethic, the national brand portfolio, ownership of marquee stores in Sydney and Melbourne, and an alliance with American Express.

In the company’s report to the ASX, total actual sales for 1H09 is $1.06 billion, a drop of 6.4 per cent, and gross profit is $418.9 million, down 7.3 per cent. A profit after tax is still able to be declared, however, because the cost of doing business is down $28.7 million, or 8.6 per cent, to $304.5 million.

David Jones further announced that the company has net debt of less than $100 million and that a dividend of 11 cents per ordinary share will be paid for the 6 months ending 24 January.

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