By Claire Reilly
David Jones has issued an update on its “Future Strategic Direction Plan” today after the company posted a 40 per cent decline in full-year profits. The plan was introduced in March this year to help address sliding profits amid the current retail climate, and centres on three key pillars: transformation, growing the store network and strengthening the core business.
Providing an update on the company's strategy, David Jones CEO Paul Zahra said the company has made “good progress” on addressing these goals.
Initiatives enacted by DJs include the foundation of its Omni Channel Retailing (OCR) business, efforts towards Cost Price Harmonisation, increasing customer service and engagement, investing in technology, building management skills, adding Full Line department stores and “Village Format” stores to its network and boosting its portfolio of brands.
In terms of price harmonisation, DJs outlined the specific price reductions it had made on a number of brands in categories including fashion, beauty, home products and electronics.
While not as extensive as the cuts made in other categories, the reductions in consumer electronics included up to 20 per cent reduction in price on 15 SKUs from Beats by Dr Dre, up to 20 per cent on 2 Canon SKUs, up to 28 per cent on 8 Bose SKUs and up to 17 per cent on 2 Olympus SKUs.
Zahra spoke about the retailer’s move to work with suppliers in bringing cost prices in line with prices overseas.
“The price reductions achieved to date are pleasing, however they do raise the issue of deflationary pressure on our business,” he said. “Some of this deflationary pressure has been offset by volume increases. Importantly we are undertaking a review of all categories with a view to maximising the space allocated to high margin products, which in turn will go some way in counteracting deflationary pressure.”
In its strategy update, David Jones also a valuation of the four properties it owns in the central business districts of Sydney and Melbourne, noting the “potential sale price of these assets” at $612 million – above their book value of $460 million.
“The company has commenced a review to investigate opportunities to unlock and enhance the value of its property portfolio for the benefit of shareholders. The company’s initial review indicates potential value upside from the development of these sites.”
While David Jones has made no mention of a specific sale, it confirmed that “detailed analysis on the development opportunities of each site” would be provided to the market in six months time.