David Jones boss John Dixon has blamed continuing weak consumer sentiment for the 0.7% fall in comparable sales for the year ended 30 June 2017, compared to the 7% growth it saw for the same period in 2016.
David Jones’ total sales grew 1% for the full year to $2.2 billion, with online sales now making up more than 4% of total sales
Australia’s oldest department store also unveiled a 25% downturn in full-year profit for 2017, to $127 million, down $46 million from the pervious year. Dixon says the competitive retail environment forced it to heavily discount stock, which saw its gross profit margin fall. He also called out high debt levels, growing real estate costs and rising utility bills as key reasons for this.
David Jones’ latest financial results is the lowest since South African group, Woolworths Holdings, acquired the business in 2014.
“Despite record low interest rates, the Australian consumer is heavily indebted with recent regulations increasing mortgage costs,” Woolworths Holdings said in a company statement.
“Consumer confidence remains below the baseline. Together with low wage growth, underemployment and increasing energy costs, disposable income and consumer confidence will remain under pressure.”
Woolworths Holding’s CEO, Ian Moir, warns that market conditions in the year ahead are likely to be “constrained by the same economic and political conditions that impacted our performance during the year under review.”
He says that David Jones will be looking at new ways to lure shoppers, including focusing on its private label exclusive brands, as well its gourmet food offering, which is currently underway.
Two months ago, David Jones unveiled its plans to target a growing generation of food-obsessed shoppers, with its $100 million investment into gourmet food as part of its strategy to survive in today’s unsettling retail environment, by fusing leisure and shopping.
“We are confident that our strategies will deliver a future-fit business capable of long term profitable growth,” says Moir.