Big retailers confirm consumer funk

Given some of the, er,  happy interpretations in the press, you really should read the quarterly releases of David Jones and Myer for yourself (full reports are at the end). Not much here to worry the RBA. First, DJ’s:


·  Challenging trading conditions experienced throughout February & March but improved in April with Easter & colder weather

·  3Q11 Total Sales Revenue of $411.7 million – down 1.4% on 3Q10 ($417.4 million) on a statutory weeks basis

·  3Q11 LFL Sales Revenue down 1.3% on 3Q10 on a statutory weeks basis

·  On an adjusted weeks basis 3Q11 Total Sales Revenue down 3.2% on 3Q10

·  On an adjusted weeks basis 3Q11 LFL Sales Revenue down 3.1% on 3Q10

·  2H11 PAT growth guidance of ~+5%* reaffirmed on the basis that the improved trading conditions in April continue throughout 4Q11.

David Jones Limited (DJS) today reported Total Sales Revenue of $411.7 million for the third quarter of the 2011 financial year (3Q11) being the period 30 January 2011 to 30 April 2011.

This represents Total Sales revenue growth on a statutory weeks basis compared to 3Q10 ($417.4 million) of -1.4%.

On a Like-for-Like (LFL)** statutory weeks basis Sales were down 1.3% on 3Q10.

The FY11 reporting week started one week later than FY10, which was a 53-week year.

Comparing the sales for 3Q11 to the same calendar weeks in 3Q10 (i.e. 31 January 2010 to 1 May 2010) Total Sales decreased by 3.2% and on an LFL basis sales declined by 3.1%.

David Jones CEO Mr Paul Zahra said, “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.

“There continued to be aggressive discounting by retailers throughout the quarter as they tried to address conservative consumer sentiment. Fortunately we have a strong business model and an experienced management team and we managed the key components of our business (such as inventory and costs) very tightly,” Mr Zahra said.

The better performing categories in 3Q11 were Contemporary Womenswear, Accessories, Menswear and Childrenswear. There was no discernable trend on a state-by-state basis, with all. States reflecting the impact of cautious consumer sentiment.

Now Myer:

Q3 FY11 sales of $657 million down 2 percent

Gradual improvement in sales during the quarter

Myer Holdings Limited (MYR) today reported total sales for the third quarter to 30 April 2011 of $657 million, down 2.0 percent compared to last year. On a like-for-like basis, sales were down 3.1 percent compared to last year. Sales for the quarter were negatively impacted by approximately $6 million as a result of the Queensland and Victorian floods and Cyclone Yasi.

Womenswear, menswear, cosmetics and youth were the strongest performing categories during the quarter. The electrical business continued to be impacted by ongoing price deflation in a number of electrical and console categories. The sales performance excluding the electrical business was a pleasing increase of 0.9 percent compared to last year. Sales excluding electrical were down 0.3 percent on a like-for-like basis. Our decision to exit whitegoods and re-engineer the music business also continues to impact the like-for-like sales comparison, but going forward the move will result in additional space for higher margin categories.

Customers have responded well to our rebuilt flagship store in Melbourne with sales continuing to gain momentum in line with our expectations.

… “While the last three months continued to be characterised by a cautious consumer with an increased propensity to save, we have seen an improvement in the retail environment. There was a moderate and steady improvement in sales as the third quarter progressed and we had a pleasing mid season sale, which was ahead of last year.

“We have continued with a measured and targeted investment in additional hours rostered in selected stores. Improving our level of service to customers and their in store experience remains a top priority for Myer. This is in addition to a significant investment in training, rewards and staff development in customer service practices.

“The team and I were delighted with the feedback following the formal launch of the world-class Myer Melbourne store…


During the remainder of FY2011, we anticipate trading conditions will remain challenging and we continue to expect NPAT for FY2011 to be up to five percent below last year’s NPAT of $169 million.



David Llewellyn-Smith


  1. One thing not discussed was the Import Consumption figures in the Terms of Trade this week. Namely (From ABS Site)

    In trend terms, imports of consumption goods fell $24m to $5,203m.

    In seasonally adjusted terms, imports of consumption goods fell $66m (1%) to $5,178m.

    The main components contributing to the fall in the seasonally adjusted estimates were:
    textiles, clothing and footwear, down $58m (8%)
    toys, books and leisure goods, down $27m (8%).

    Clearly shows that even with the high AUD and imported items getting cheaper, people arent buying them.

    • With high AUD, savings aren’t passed on to the consumers…

      Compare to what you can get from ASOS, Amazon UK and First Ireland (cookware), Australia is 2x over priced…

    • Could it be that consumers have just switched from local retailers to Internet suppliers for textiles, clothing and footwear,toys, books and leisure goods?
      This means consumption has not deteriorated but that internet sales just aren’t being picked up.

  2. I’m hearing from other retailer sources that Easter egg sales weren’t flash this year.

    Myer & DJ are good indicators but the key reports will be Woolies, Coles, JB HiFi and Harveys.

    I guess for now the best they can do is try and put some lipstick on the pig.

  3. The_Mainlander

    Well, my wife and I just got back from overseas and we saved between 40-30% without even looking at the exchange rate for purchases we made OS.

    Now we are back we buy as much as we can from and use a drop-ship company for stuff you can only buy in the USA that then sends it on to Australia. Simple.

    Love it.

    Saving on discretionary spending and getting better product than Australia!


    By the way the Australian retail experience is pants. It just suxs it does… try shopping in Malaysia, KL at KLCC – just awesome or in Tangs in Singapore there version of DJ’s or Myer… plus so many other retail outlets that are cheaper and better (real service).

    Australian retail needs to lift its game massively… no reason to shop local when you can buy better online globally.

    Would I buy Myers-DJ shares – no chance.


    • Enjoy the honeymoon period your having because the retail landscape will change in the not too far distant future.