- BRW Lists
Published 15 February 2013 10:16, Updated 18 February 2013 07:20
End of the music ... David Jones’ chief Paul Zahra says the company will exit the poorly-performing music and DVD categories, but neglected to update investors on the performance of the company’s online ventures. Photo: Louise Kennerley
There is one thing conspicuously absent from David Jones’ latest sales report: the new online store did not rate a mention.
On Thursday the company reported $590.1 million in sales for the three months ended 26 January 2013 in statements to the Australian Stock Exchange. That marks a drop of 1.4 per cent compared with the same period the previous year.
For the first half of the fiscal year, sales were down 0.7 per cent year-on-year to just over $1 billion.
The department store retailer, which is 175 years old this year, launched its online, mobile and iPad stores at the start of the quarter, in early November.
“We’ve got a great history of reinventing ourselves. What we haven’t got a great history of is embracing technology and that’s my aim and vision for the company,” chief executive Paul Zahra told BRW at the time.
David Jones is yet to provide guidance on how online sales specifically tracked over the critical Christmas and January sales season. Zahra has previously said he expects future growth to come from online channels rather than the 36 bricks-and-mortar stores.
In Thursday’s sales report, Zahra says the company will continue to focus on improving margins.
“Our focus is on improving the profitability of our sales,” Zahra says. “We are exiting the low-performing categories of DVDs, music and games. We also continue to reduce the depth and breadth of our promotional discounting events and continue to work on changing our category mix to increase focus on higher-margin categories.”
Zahra says the high-margin categories of fashion and beauty delivered sales growth in both the first half and the second quarter of the 2013 fiscal year, but the home categories, especially electronics, continued to be “challenging”.
In research from Morningstar Equities, senior equities analyst Tim Montague-Jones says a focus on extracting margin should help lift profit and offset weakness from falling sales but may not help in the long term.
“The first half result will be released in March and will provide further colour on the operating performance,” Montague-Jones says. “We make no change to our underlying thesis that the company will find it increasingly difficult to extract sufficient returns on capital as consumers increasingly decide to shop at lower cost online stores. Our forecasts are unchanged and fair value estimate retained at $1.70.”
David Jones shares closed on Thursday at $2.67.