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David Jones says Q1 LFL sales down 11%
28
Nov '11
David Jones Limited (DJS) reported Total Sales Revenue of $414.3 million for the first quarter of the 2012 financial year (1Q12) being the period 31 July 2011 to 29 October 2011 (versus $466.6 million: 1 August 2010 to 30 October 2010). This represents Total sales decline of 11.2% on 1Q11.

On a Like-for Like (LFL) basis Sales Revenue declined by 11% for the first quarter of the 2012 financial year (1Q12).

David Jones CEO Mr Paul Zahra said, “Our trading performance in 1Q12 was broadly in line with the guidance we provided at the time of our full year results in September. The challenging conditions we faced in 4Q11 continued in 1Q12.

Despite this being below our original expectations in July it is consistent with our comments to the market in August and September at the time of our 4Q11 Sales and FY11 Results announcements when we reaffirmed our 1H12 PAT Growth Guidance of -15% to -20% (based on our expectation that sales in 2Q12, whilst still negative will improve from 1Q12). Whilst trading improved in October and November 2011, it continues to be negative on last year.

"Our trading performance in 1Q12 relative to our peers reflects the fact that we cycled a relatively strong sales quarter last year (1Q11 was +3.2% vs. 1Q10 on a statutory weeks basis). In addition our customer base has been hardest hit by the wealth effect including factors such as volatility in the equity markets, the weak housing market in particular at the top end, employment uncertainty in certain white collar professional sectors and uncertainty surrounding Europe's sovereign debt crisis resulting in consumer sentiment weakening and household savings increasing.

"Our business was also adversely impacted throughout 1Q12 by:
• disruption due to the significant refurbishment of our Chadstone (Vic) and Warringah Mall (NSW) stores;
• the fact that we were cycling the opening of our redeveloped Bourke Street Mall (Vic) store on 13 August 2010;
• price deflation in the Electricals market in particular TVs which were severely impacted by the strong A$ and the competitive environment; and
• the higher mix of discounted stock as we clear our excess Inventory," Mr Zahra said.

Testament to David Jones' core customer base having been adversely impacted by the wealth effect is the fact that the Company's stores located in the best demographic areas saw the most marked decline in trading. Foot traffic and basket size were down in all stores.

The downturn in sales was felt across all categories particularly in the Company's Home Entertainment and Electricals category.

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David Jones Limited (DJS)

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