By Claire Reilly
David Jones released its first quarter results for the 2011-12 financial year today, posting an 11.2 per cent decline in total sales. For the period 31 July to 29 October 2011, DJs saw total sales revenue of $414.3 million, compared to $466.6 million for the same period in 2010 (1 August to 30 October).
On a like-for-like basis, sales revenue fell by 11 per cent for the first quarter of the financial year, and the company reaffirmed its profit guidance for the first six months of FY2012, indicating a 14 to 20 per cent decline in profit after tax.
David Jones announced similarly disappointing profit results for the fourth quarter of FY2011, posting a 10.3 per cent decline in sales, when compared to 2010 (calendar adjusted weeks).
Commenting about the fall, David Jones CEO Paul Zahra said the company’s performance over the last quarter remained in line with the guidance that was issued with its full-year results in September.
“The challenging conditions we faced in 4Q11 continued in 1Q12,” he said. “Whilst trading improved in October and November 2011, it continues to be negative on last year.
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“In addition our customer base has been hardest hit by the wealth effect including factors such as volatility in the equity markets, the weak housing market in particular at the top end, employment uncertainty in certain white collar professional sectors and uncertainty surrounding Europe’s sovereign debt crisis resulting in consumer sentiment weakening and household saving increasing.
“Testament to [this] is the fact that the company’s stores located in the best demographic areas saw the most marked decline in trading. Foot traffic and basket size were down in all stores.”
In particular, Zahra singled out consumer electronics and home entertainment as poor performers for the department store chain. According to Zahra, the business was “adversely impacted by price deflation in the electrical market, in particular TVs, which were severely impacted by the strong Australian dollar and the competitive environment.”
He noted that discounted stock (resulting from a clear out of excess inventory) had a negative effect on business, as did the refurbishment of stores in Chadstone (Victoria) and Warringah Mall (NSW).
Despite this, the company has “continued to successfully grow its social media sites and its online offering” over the past year. Looking ahead, it will focus on its multi-channel offering with “a view to investing in and rolling out a world class multi-channel offering by mid calendar 2012”.