Loyal David Jones customers are spending more than they did before the financial crisis, but the department store chain is reluctant to call the bottom of the market just yet.
The embattled upmarket retailer pleasantly surprised the market on Thursday when it reported fall in second quarter sales that were not as bad as expected.
Sales fell 3.1 per cent, but like-for-like sales revenue for the quarter was down 2.4 per cent compared with the same period in the previous year.
Analysts had been expecting a fall of between six and eight per cent for the quarter.
Chief executive Paul Zahra said transaction numbers were down while shoppers outlaid more than at the same time in 2008.
"There's certainly less people coming into our stores but once those customers are in our stores they're actually spending more," Mr Zahra told a media briefing.
"So we're extracting more out of those customers."
The company said sales for the first three weeks of the third quarter of fiscal 2012 were broadly in line with David Jones' second quarter performance.
Still the company remained in negative territory.
"Customers remain cautious," Mr Zahra said.
"You could argue the worst is behind us. I suppose in our numbers it certainly appears that way, but it is too early for us to tell."
David Jones reaffirmed its first half profit guidance of minus 15 per cent to minus 20 per cent, after posting total sales revenue of $598.5 million for the second quarter of the 2012 financial year to January 28.
The beauty category performed well during a cooler summer, as did womenswear, menswear, footwear and accessories and gifts, which all recorded growth.
But electricals, homewear and furniture continued to perform badly.
Electrical items were discounted by about 20 per cent.
Mr Zahra said the company experienced an uplift in sales of items where the supplier had taken a price reduction.
"It's very early to tell whether that's going to be sustainable," he said.
While the sales performance this quarter reflected the continuing challenging retail environment, there had been an improvement in the second quarter of fiscal 2012 versus the first quarter of the year.
The company introduced a minimum level of staffing and higher wages to ensure service levels throughout the group would be maintained.
Mr Zahra said there had been an improvement in the performance of high-value demographic stores compared with the first quarter.
The company recently launched a bridal boutique to take a slice of the $4.3 billion bridal market.
Clearance trading was pleasing following a decision to limit category-wide discounting during the pre-Christmas trading period.
"Whilst we are confident that this will be cleared in full year 2012, as previously flagged, this will have an impact on our gross profit margin performance in both the first and second half of fiscal 2012," Mr Zahra said.
