DJs shares slump on anaemic sales

David Jones has posted a modest rise in sales, but not enough to recover from a big fall last year, causing its shares to slump.

The upmarket department store has recorded a 0.3 per cent rise in sales during the three months from the end of July to late October.

David Jones's total sales were $415.6 million for the period.

It is the first time in two years that the company has grown sales in a quarter rather than seen them shrink.

David Jones chief executive Paul Zahra says that positive trend is continuing into the current quarter.

"We have seen a continued improvement in sales tracking quarter on quarter since the first quarter of 2012," he noted in the report.

Mr Zahra says the company's core, high profit margin fashion categories are the best performers.

"Particularly pleasing is the fact that our high margin categories (womenswear, menswear, beauty, accessories and shoes) all delivered positive sales growth in the quarter," he observed.

"Our Home and Electricals categories on the other hand continued to be challenging." David Jones says Western Australia, New South Wales and Victoria all recorded sales growth, while Queensland sales were affected by the refurbishment of a key store.

City Index chief market analyst Peter Esho says David Jones's sales growth is not impressive given that the quarter it is compared to last year saw a sales slump.

"Comparable sales growth is positive but by a negligible 0.3 per cent, which is not only less than Myer’s 0.8 per cent, but inadequate given the 11 per cent in the same period last year for David Jones," he wrote in a note on the figures.

"The market is expecting a flat revenue and earnings number this year, so there aren’t too many ambitious growth assumptions built in, but 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." Other investors seem to agree with Mr Esho's analysis, with David Jones shares relatively steady early before dropping 6.6 per cent to $2.40 by 3:33pm (AEDT).

The retailer says the first few weeks of second quarter sales are tracking in line with the improvement seen last quarter.

Less sales Paul Zahra says the department store has reduced the length of its sales, and is trying to sell more full-priced stock.

"In line with our decision to reduce the duration of our Half Yearly Clearance in June we also decreased the duration of our October event by two weeks," he said.

"This is consistent with our strategy to improve the profitability of sales generated by the business by reducing the length of our discount events and focusing on full margin, new season stock as well as phasing out low productivity categories and expanding high margin categories." David Jones says customers have embraced its new webstore, launched on November 6, however it did not quantify traffic or sales through the site.

Mr Zahra says online traffic has doubled or tripled since the website launch, but surged well beyond expectations during a major online sale yesterday.

"We were completely overwhelmed, the site simply went into meltdown and could not cope with the traffic which caused the outage," he said.

"It's a capacity issue, that's all.

I say that's all [because] it's fixable, we know what we need to do, and we're working both locally and internationally to get that fixed as quickly as possible." The company says a trial of its new point of sale system in three Sydney stores has been successful, and a full roll-out will take place next year.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9287-0.0078-0.84%
    AUDUSD=X
    0.5533-0.0033-0.59%
    AUDGBP=X
    0.6721-0.0063-0.93%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg