David Jones will stop selling DVDs, music and games, after falling electronics sales dragged down its overall sales results.
The upmarket department store reported total sales revenue of $590.1 million for the second quarter of its current financial year, which covered the crucial pre and post-Christmas trading periods.
Sales were down 1.4 per cent compared to the same period a year earlier, with the company's chief executive Paul Zahra laying the blame squarely on electronics.
"We are pleased with the performance of our high margin fashion and beauty categories (such as womenswear, beauty, menswear, accessories and shoes) which delivered sales growth in the second quarter and first half of financial year 2013," he noted in the report.
"Our sales performance during this period was, however, adversely impacted by our home categories, in particular electronics, which continued to be challenging and subject to ongoing deflationary pressure." David Jones says it has shifted its focus from selling more goods to increasing the profit margins on what it sells.
The decision to exit DVDs, music and games is part of that push, as they are segments subject to strong competition from other stores and online, which has pushed prices continually lower.
"Our fashion and beauty business is doing very well and it's actually in good shape and we are dragged down by the home categories and, particularly, electronics, which would include TVs," Mr Zahra explained in a media briefing.
"Historically we've had a split of about 55/45, fashion and beauty 55, 45 being home and food - we're currently at about 65/35 split." Paul Zahra says David Jones will also look to reduce the number of products on sale and the size of the discounts.
"We also continue to reduce the depth and breadth of our promotional discounting events and continue to work on changing our category mix to increase focus on higher margin categories," he added.
Investors were not impressed by the company's sales, which missed the lower end of analyst forecasts ranging between $593-602 million according to a survey by Bloomberg.
David Jones shares were down 2.2 per cent to $2.62 by 10:56am (AEDT).
Rival Myer also saw its shares dragged lower, also down 2.2 per cent $2.62.