David Jones is out with a very nasty Q3 sales update.
3Q13 Total Sales down 2.2% (3Q13: $391.1 million vs. 3Q12: $399.8 million).
- 3Q13 LFL Sales down 3.4% (3Q13: $386.2 million vs. 3Q12: $399.8million).
- The Company reduced its discounting program throughout the quarter.
- Progress being made in exiting and consolidating low productivity categories.
- Investment in customer service has resulted in an improvement in the Company’s service
- metrics.
- Costs continue to be tightly managed.
David Jones Limited (DJS) today reported Total Sales Revenue of $391.1 million for the third quarter of the 2013 financial year being the period 27 January 2013 to 27 April 2013 (3Q13). This represents a Total ales decline of 2.2% on 3Q12 (3Q12: $399.8 million).
On a Like-for Like (LFL) basis Sales were down 3.4%. The Company’s LFL Sales this quarter include the Canberra Centre (ACT) store which was disrupted due to refurbishment and excludes the new Highpoint (Vic) store which opened in mid March 2013.
David Jones CEO and Managing Director Mr Paul Zahra said, “In the current environment of cautious consumer sentiment we made a deliberate decision to continue to focus on the areas of our business that we can control namely; GP Margins, Inventory and Costs.
“The unseasonably warm start to winter impacted our business in particular Womenswear.
“Our high margin Beauty, Menswear and Childrenswear categories delivered growth for the quarter, however our overall sales performance was once again adversely impacted by our Home categories, in particular Electronics which continues to be subject to industry and price pressures.
“Despite the warm start to the season our Winter Inventory was well managed and is at lower levels than the previous corresponding period.
“We continued our strategy of reducing discounting throughout 3Q13 notwithstanding aggressive promotional activity in the market. Most notably our mid-season sale (Invitation Event) was reduced by one full week and we removed our $10 million Floor Stock Clearance event.
“Our view is that the ongoing increase in the depth and breadth of discounting that we are seeing in the market is not sustainable. This is a view shared by many brands and as a result we have seen an increase in the number of brands looking to convert their distribution arrangements to department store exclusive agreements with David Jones. Recent additions to our portfolio that fall into this category include Givenchy, Pucci, Joseph, Finders Keepers, Gumboots and Sunseeker.
It doesn’t look winding back discounts is working too well. Nor, for that matter, does this look like entirely like a weather problem. Electronics aren’t winter goods. Shares are down 5%. Consumer discretionary is 1.5%. Market is down 50 points. Dollar is down 30 pips.
Picking up where we left off last week.
