Department store David Jones has reported a drop of 1.4 per cent in sales for the third quarter of the 2011 financial year, citing challenging trading conditions and cautious consumer sentiment as the cause.
Total sales revenue for the company from January 30, 2011 to April 30, 2011 was $411.7 million, down from $417.4 million for the same period last year, on a statutory weeks basis. On an adjusted weeks basis, David Jones' total sales revenue for the third quarter 2011 fell 3.2 per cent compared to 2010 figures. Like for like sales on a statutory weeks basis were also down by 1.3 per cent.
The retailer identified contemporary womenswear, accessories, menswear and childrenswear as the better performing categories across the third quarter, but David Jones chief executive Paul Zahra said the business battled against cautious consumer sentiment.
“Trading conditions were difficult throughout the quarter, however in April we experienced an improvement in retail conditions due to a later Easter and colder weather,” he said.
“There continued to be aggressive discounting by retailers throughout the quarter as they tried to address conservative consumer sentiment.”
Looking ahead, Zahra said he believes that David Jones is well equipped to push through the tough retail environment, but final results will depend on whether consumers take to spending again.
“Despite the challenging retail environment experienced in 3Q11 David Jones has a solid foundation from which to trade through the current challenging macro economic environment. In terms of outlook, assuming there is no further deterioration in trading conditions and we continue to experience April’s trading conditions throughout 4Q11, we expect our 2H11 Profit After Tax (PAT) growth to be approximately plus five per cent,” he said.
“We also reaffirm our five per cent to 10 per cent PAT growth guidance for FY12, subject to April’s trading conditions continuing throughout FY12, [however] noting that if consumer shopping behaviour continues as per our April trading experience we expect our PAT growth will be at the lower end of our guidance.”
Zahra also said that he expects trading at David Jones' Sydney city stores to improve.
“The launch of the new Westfield Sydney Centre has helped drive foot traffic into our Sydney CBD stores which we expect will gain further momentum as retail conditions improve,” he said.
The company recently closed two of its department stores, in Toombul (Qld) and Newcastle (NSW) and opened one new store, Claremont Quarter store in Perth, in February this year.