Department store David Jones has announced plans to funnel $450 million into its latest store venture in a bid to boost sluggish sales.
Construction on the new store, at the Indooroopilly Shopping Centre in Brisbane, is set to begin in the first quarter of 2012, with the store expected to open in the first quarter of 2014.
The project is part of a 20-year agreement for lease with the Commonwealth Superannuation Corporation (CSC), the owners of the shopping centre and the fit-out will be funded jointly by the landlord, suppliers and David Jones.
At 14,200 square metres in size, the new Indooroopilly outlet will be equipped to house over 120 additional specialty stores and is expected to generate sales of at least $40 million per year. This figure is expected to rise to $5 million by the second year of lease.
David Jones CEO Paul Zahra said the new development is an opportunity to take advantage of the “high value, high growth demography” of the South West Brisbane area.
"We are delighted to be establishing a presence in Indooroopilly Shopping Centre. It has the best demographic profile in metropolitan Brisbane and is a centre we have wanted to be present in for some time as we believe its high growth, high value demography is a perfect fit for our customer offering,” he said.
David Jones group executive of retail development and procurement Antony Karp added that the new development will also allow the retailer to leverage other stores in the area and increase market penetration.
“We have for some time recognised that Queensland is a market which represents growth opportunities for our Company and in which David Jones is under-represented. Given that department store penetration in the South West Brisbane corridor is currently 3.25 per cent - significantly lower than the average experience across our major suburban stores of 7.2 per cent – we believe there are substantial incremental sales available in the region which we will capture through both our new Indooroopilly store and our refurbished Toowong store,” he said.
As previously reported on ragtrader.com.au David Jones recently suffered a first quarter drop in sales of more than $50 million. For the first quarter of the 2012 financial year, July 2011 to 29 October 2011, the listed company reported a total sales revenue of $414.3million. Between August 1 2010 to October 30 2010 sales were $466.6million, which represents a total sales decline of 11.2 per cent.