By Patrick Avenell
David Jones today reported declines in both total sales and like-for-like sales for the third quarter of the 2013 financial year. In the three months to 27 April 2013, total sales declined 2.2 per cent ($8.7 million) to $391.1 million and like-for-like sales were down 3.4 per cent ($13.6 million) to $386.2 million.
These declines are in contrast to Myer, which has been registering incremental sales growth over the last few quarters. This is because Myer is focusing on gross sales while David Jones concentrates on eking out as much profit per sale as possible, according to retail analyst Daniel Broeren from CIMB.
“What David Jones has done is cut a number of promotional events usually held during this quarter in an attempt to increase the average margin that they generate,” Broeren said.
“They removed five tactical promotion events, cut their mid-season sale back by one week and also removed a floor stock clearance event. All of that impacted the level of like-for-like sales growth that they generated, but they are chasing a higher gross profit margin.
“Myer and DJs are taking slightly different strategies at the moment around gross profit margin. Myer has said it is going more for a sales growth strategy, while DJs is more about reducing promotions and maximising their full price sales.”
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David Jones CEO Paul Zahra confirmed there has been a conscious decision to cut back on “unsustainable” discounting at the famous department store.
“Our view is that the ongoing increase in the depth and breadth of discounting that we are seeing in the market is not sustainable,” he said. “This is a view shared by many brands.”
To replace the volume of sales created by discounting events, David Jones is targeting Chinese tourists in Australia. From 29 May 2013, stores will accept UnionPay credit and debit cards. UnionPay is the only domestic financial services card company approved in China. Zahra said this will appeal to the 700,000 tourists visiting Australia from China every year.
One thing David Jones does have in common with Myer is an obsession with the byzantine concept ‘omnichannelling’.
“Management is focusing on building the company’s omnichannel offer as a matter of priority,” said a David Jones company announcement. “Investment in service has continued and is delivering an improving in the company’s service metrics.”
David Jones “online sales growth” doubled during the quarter, compared to the previous corresponding period, according to the company.