The latest results from David Jones South African owner, Woolworths Holdings, reveal that the retailer slipped from a 15-year high in mid-November to around 10% for the 26 weeks to December 27.
Meanwhile, like-for-like sales growth was 9.7% while retail space increased by 1.5%.
In Australian dollar terms, sales, including David Jones’ concessions, increased by 11.2% compared with the same half-year period last year. It’s understood Christmas sales at David Jones were significantly stronger in 2015 than 2014 and the 26-week result does not include the January clearance sales, which are expected to bolster the sales figures.
David Jones like-for-like sales grew by 10.4% for the 20 weeks to November 15, prompting analysts to question if the growth rate was sustainable, and the role of “acquisition accounting.”
In its 2015 Report, Woolworths gives an indication of its confidence in Australia by pointing to growth from wealthier Australians who “ maintain strong purchasing power In Australia”.
“Our focus is on the top two affluence bands which represents a quarter of the population and more than 45% of discretionary spend. The Australian population continues to grow, with increased life expectancy translating to growing older, wealthier customer segments.
“The growing professional workforce and increase of women in the workforce is resulting in greater household spending capacity. Actual spend data shows a different dynamic across customer affluence bands with the growing number of wealthier Australians maintaining their strong purchasing power and adopting more expansive spending behaviour.
“Retail competition remains high, driven by the continued growth of international entrants, increasing penetration of online, and space growth. The continued penetration of online shopping has resulted in price savvy consumers and the demand for a unique in-store customer experience. Competition from international online retailers.”
Meanwhile, Citi managing director retail, Craig Woolford told the media that he predicted the discounting at David Jones would slow by early in 2016, creating a more level playing field for the two major department stores.
The most recent sales update shows a slight slowing in David Jones growth from the mid-November sales update but it’s significantly higher than the 6.4% sales growth for the 12 months to June 30 and same-store growth of 3.7% for the same period.
Country Road’s sales in Australia and New Zealand increased by 13.4% in Australia dollar terms, but a 16.4 per cent increase in floor space kept its like-for-like sales almost flat at 0.1%.
Woolworths said this space was reallocated from other brands in David Jones so it did not constitute new retail property but it did keep the comparable sales result subdued.
Group sales for Woolworths improved by 17.1% for the first 26 weeks of fiscal 2016 and by 12.3% compared with the same period last year, not including the sales results from David Jones.