Australia Markets closed

DJ's shares slide as sales disappoint


There are few signs cautious shoppers will loosen their purse-strings heading into Christmas, troubled department store operator David Jones says.

David Jones reported on Wednesday sales revenue rose a slender 0.3 per cent to $415.6 million in the first quarter of fiscal 2013.

Analysts were expecting a rise of up to one per cent, in line with rival Myer's first quarter results announced last week.

Investors punished David Jones, sending its shares more than six per cent lower, closing 16 cents down at $2.41.

In percentage terms the retailer was the worst-performing stock on the S&P/ASX100, according to IRESS data.

Although it was the first time in two years that David Jones had experienced positive quarterly sales growth, chief executive Paul Zahra said conditions were still tough.

Mr Zahra said trading in the first couple of weeks of the second quarter was tracking broadly in line with the first quarter and conditions had stabilised.

"We are not seeing the volatility in trading but we have not certainly seen any change in consumer sentiment," Mr Zahra told reporters during a conference call on Wednesday.

"There has been no change in government policy or anything in the macroeconomic environment that would actually change people's view about shopping."

Mr Zahra said higher margin categories such as womenswear, menswear, beauty and accessories and shoes were David Jones's best performers in the quarter, reporting positive sales growth.

However, he said home and electrical categories continued to be challenging.

David Jones's 0.3 lift in like-for-like, or comparable store, sales was below Myer's 0.8 per cent growth over the first quarter.

Australian retailers have been hit by not only weak consumer sentiment, but also the rise in online shopping.

Earlier in November, David Jones launched its own online shopping website, which crashed on Tuesday after it launched a one-day online and instore promotion in competition with the Click Frenzy promotion.

Mr Zahra said the website, which had doubled traffic and tripled sales since it relaunched, would offer clearance sales from Christmas Day, when most of its physical stores were legally prevented from opening.

"This time last year we were going into this Christmas trading period with a severe handicap and that's not having a functional website which we now have," Mr Zahra said.

City Index chief market analyst Peter Esho said in a research note said the David Jones results were not impressive.

"We would have thought with the recent interest rate cuts and government handouts flowing through the market, David Jones would be able to recover more than just 0.3 per cent of the declines in comparable sales from last year."