Newly released data from Vicinity Centres – the retail property business behind the likes of Chadstone, Chatswood Chase, Emporium Melbourne and the QVB – has reported a 6.5 per cent slip in department store spending in the first quarter of FY27.
This adds to trending down slips in recent quarters compared to the same quarters last year. In the third quarter of FY26, department store sales fell by 3.3 per cent, then dropped by 5.4 per cent in the fourth quarter. Through-the-year moving annual total (MAT) sales in department stores to September 2026 fell by 3.5 per cent.
This is a stark contrast to last year, where department store sales were reasonable, with Q3 FY25 sales in the segment growing by 5.2 per cent, then shifting to 1.7 per cent growth in Q4, before growing again by 4.2 per cent in the first quarter of FY26.
MAT growth for department stores to September 2025 was up by 2.4 per cent.
The sales slump across department stores at Vicinity Centres comes amid ongoing scrutiny over the business health of David Jones through 2026.
Department store sales make up about 3 per cent of total MAT sales at Vicinity Centres, with speciality stores taking up the bulk of 42 per cent.
Speciality sales were up 1.2 per cent in the first quarter of FY27, up from a 0.9 per cent slip in the fourth quarter of FY26.
Most retail categories saw a better third quarter than fourth quarter in FY26. Discount department stores, which would include the likes of Kmart, Big W and Target, saw a 5.1 per cent lift in the third quarter, before dropping to a 0.3 per cent lift in the fourth quarter. In the first quarter of FY27, DDS sales were up 2.8 per cent.
Vicinity Centres also shared results across product categories. Apparel and footwear saw reasonable sales growth, lifting 3.5 per cent in the first quarter of FY27. This was up from a 0.2 per cent decline in the last quarter of FY26.
Vicinity noted in the report that activewear retailers have been re-categorised from its leisure category and added to apparel and footwear effective Q1 FY27. The leisure category saw a 2.4 per cent lift in the fourth quarter, before falling 2 per cent in the first quarter of FY27.
Jewellery, meanwhile, was one of the stronger categories at Vicinity, with its sales growing from 5 per cent in the last quarter of FY26 to 9.4 per cent in the first quarter of FY27.
Vicinity Centres CEO and managing director Peter Huddle told shareholders that since its FY26 results announcement in mid-August, market volatility and macroeconomic uncertainty have certainly increased.
“The cash rate is at a 15-year high. Unemployment has risen to 4.7%, its highest level in almost five years. Globally, capital is also becoming more selective as investors re-assess risk and return in a higher-rate environment,” Huddle said.
“While strong occupancy and leasing spreads attest to the quality of, and retailer demand for, our assets, we place equal weight on maintaining disciplined oversight of risk across the portfolio.”
Huddle added that on a total portfolio basis, its retail sales growth was “resilient” at 3 per cent in the September quarter, against 4.4 per cent in the same time last year. Specialty and mini-majors grew 3.6 per cent, strengthening from 2 per cent and 3.2 per cent in the June and March quarters, respectively.
“While shoppers remain deliberate in how they spend, with a focus on value, quality and convenience, discretionary spending remains evident, with jewellery, cosmetics, and Apparel & Footwear performing particularly well.
“Despite near-term pressure on luxury sales from cost-of-living conditions, we are progressing projects at Chadstone that will materially expand the store footprints of several leading global luxury brands. Their commitment to invest alongside us reflects a shared long-term view and reinforces the enduring attractiveness of the Australian luxury category.”