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Profits fall at David Jones Limited
May '11
David Jones Limited (DJS) 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.

The Company's newly redeveloped Bourke Street Mall (Vic) store delivered a good sales result and has established David Jones on an equal footing in its competitor's home market. The sales benefit from Bourke Street Mall was largely offset by the planned disruption at the Company's Warringah Mall (NSW) and Chadstone (Vic) stores as a result of the refurbishment currently being undertaken in these stores.

The Company's recently opened Claremont Quarter store has also performed well since opening on 16 February 2011. The Company closed two of its grid 4 stores, Toombul (Qld) and Newcastle (NSW) on 29 January 2011 and is transitioning the EBIT contribution of those stores to its nearby Chermside (Qld) and newly refurbished Kotara (NSW) stores respectively. Importantly, the Sales lost as a result of these two store closures have largely been offset by the new Claremont Quarter store.

Mr Zahra said, “The launch of the new Westfield Sydney Centre has helped drive foot traffic into our Sydney CBD stores which we expect will gain further momentum as retail conditions improve.”

Trading Environment and Outlook

Mr Zahra said, “We are fortunate that despite the challenging retail environment experienced in 3Q11 David Jones has:

• a resilient business model;
• an experienced management team;
• a distinctive competitive positioning;
• an excellent performance track record; and
• a strong Balance Sheet.

“This provides a solid foundation from which to trade through the current challenging macro economic environment.

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