Department store David Jones has reported a drop in net profit after tax (NPAT) to $168.1 million, in line with guidance released earlier this year.
The retailer, which initially predicted a profit of between $167.7 million to $169.7 million for the period, cited tough trading conditions for the fall – 1.5 per cent down from last year's NPAT of $170.8 million.
Total sales also dipped, 4.4 per cent from $2,053.1 million in FY10 to $1,961.7 million this year, with total earnings before income tax (EBIT) decreasing to $246.5 million, down 1.1 percent from $249.2 million in 2010.
However, David Jones chief executive officer Paul Zahra said the department store was prepared for the results and was focused on future strategies to improve he business.
“We reported in July and August 2011 that we experienced extremely challenging trading conditions in June and July 2011 and that this would impact our FY11 PAT. The PAT we have announced today is in line with our guidance of minus 0.5 per cent to minus two per cent to last year,” he said.
“In FY11 we took the view that it was imperative for the long term success of the business that we invest in initiatives such as our new Point of Sale (POS), a new IT platform to facilitate our transition into becoming a successful multi-channel retailer, our new Claremont Quarter (WA) store, the refurbishment of our Chadstone (Vic) and Warringah Mall (NSW) stores, the roll-out of our branded installations and the introduction of 90 new brands into the business.”
Zahra also reaffirmed the retailer's commitment to improving it's multi-channel offer, and said the company is on track to launch its new mobile website, which will include David Jones catalogues and offers, 'Join Us/Follow Us' links for Facebook and Twitter, Stores Directory and a 'What's On' section in the initial stages.
“Throughout FY11 we made a conscious decision to invest in initiatives that would secure the long term success of our business and establish us as a successful multi-channel retailer,” Zahra said.
The company also revealed it expects the new David Jones Highpoint store in Victoria to open for trade for trade in the first quarter of calendar 2013 and to generate sales of $50 - $60 million per annum. The store will anchor the development of a new fashion wing at the north-eastern end of the existing Highpoint shopping centre which will comprise approximately 100 new specialty stores and an additional 1000 car spaces.
The company's other new stores at Macquarie (NSW), Whitford (WA), Sunshine Plaza (Qld) and Pacific Fair (Qld) are expected to open in the period FY14 – FY16. The refurbishments of the Company's Chadstone (Vic) and Warringah Mall (NSW) stores are on track to be completed in September/October this year in time for Christmas trading.
David Jones has also increased its investment in customer service initiatives recently, including the roll-out of 70 new customer and David Jones cardholder events and promotions, such as “Girls Night Out”, Lunch with Maggie Beer, Flower Show VIP Night, Bonus Points Promotions, 4-day Customer Shopping Event and Mercedes Benz Fashion Festival.
The Company is also planning to rollout its Rose Clinic (free breast screening clinic) across all of its national CBD flagship stores and will continue to increase its trading hours nationally throughout 2012.
Looking forward, Zahra said he expects sales in 1Q12 to be in line with the sales performance in 4Q11 (i.e. approximately minus 10 per cent). He also said ,management is currently working on the development of a comprehensive FY13 - FY16 strategic plan which it will disclose to the market at a separate briefing session in 2012.
“Despite 1Q12 sales being below our expectations we reaffirm our 1H12 NPAT Guidance of minus 15 per cent to minus 20 per cent to last year,” he said.
"Trading conditions remain difficult however we do get the benefit of cycling a weak base from 2Q12 onwards. Despite the immediate trading challenges we are facing, we are excited about David Jones’ future. Our company is working to become a successful multi-channel retailer and we have over the past 12 months invested in many initiatives that will deliver sustainable long term growth for our business and will generate sales in ways other than through constant discounting.”