David Jones Stuck In A Rut: Analysts
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Outlook not getting any better for DJs

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That’s what Deutsche Bank analysts concluded about yesterday’s sales figures from  David Jones, which showed sales slipping almost 5% for full year 2012.

“Today’s sales update did not highlight a significant improvement in the sales trend in our view,” said Michael Simotas Deutsche Bank analyst in an investor note, yesterday.

The high end retailer posted its sales for final Q4, which showed no improvement – dropping 1.4% to $455.8 million for the sales period 29 April-28 July 2012) and was “modestly” below expectations.

DJs’ ‘Home and Electrical’ categories continued to be “challenging,” admitted CEO Paul Zahra, while the best performing categories in Q4 were Womenswear, Menswear, Beauty and Accessories.

“We are seeing continued price deflation, particularly in the electrical area, but equally prices are coming down across the board – in beauty, accessories and even in womens and menswear”.

“With sales continuing to decline and operating costs increasing (due to underlying cost inflation and investment in service), the economics will likely continue to deteriorate,” for the high end retailer, warned Simotas.

David Jones also reaffirmed downwards profit guidance of 35% – 40% for the 2012 financial year. Deutsche Bank now estimate FY12 NPAT will fall 35.5% on an underlying basis.

Analysts are also disputing DJ’s assertion it had not benefitted from a sales boost from the Federal government’s family assistance payments.


Family assistance payments likely provided a “modest” benefit in 4Q, the analyst believes, “particularly in the clearance period (which appeals to the more aspirational customer)” and points out other high end retailers say they have benefitted from the payments.

But it looks like consumers aspiring to David Jones high-end wares could be in for a treat, with Zahra referring to DJ’s attempts to lower its prices in a bid to stay competitive against foreign rivals.

“We do want prices to come down in line with what’s happening in international markets so there’s less price difference. We are getting great cut through on price harmonisation – it’s complex but most of our suppliers get it,” he said yesterday.