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David Jones posts declining sales

David JonesDavid Jones’ South African-based parent company Woolworths Holdings Limited has released a trading update, noting a 0.9 per cent decline in full year sales for the department store.

Despite this, sales actually increased by 2.2 per cent in the second half of the year, with online sales growing by 21.4 per cent – contributing a total of 5.3 per cent of sales.

While new retail space grew by 4.2 per cent, this increase was offset by a decrease of 4.1 per cent in space reductions and closures, leading to a net retail space growth of 0.1 per cent.

“2018 has been a difficult year for the Group, as we content with extremely challenging trading conditions in South Africa and Australia, as well as poor product execution in some areas of womenswear,” the release states.

“It has been a year in which we substantially completed key David Jones business transformation initiatives.

“The disruption experienced during the year by the implementation of new inventory and online systems, the repositioning of the foods business, and the head office relocation, impacted both gross margin and costs.”

The group’s other Australian business, Country Road Group, had an increase in sales for the year of 1.7 per cent, but comparable store sales declined by 1.8 per cent.

Online sales in Country Road Group increased by 20.8 per cent over the year, representing 18 per cent of total sales, while net retail space grew by 2.5 per cent.

Over all the group’s sales increased by 1.6 per cent year over year, while earnings-per-share were impacted by the $712.5 million impairment charge laid on the David Jones business; expected to fall from 566.7 cents per share to under 400.

The sales disruption caused by the $200 million David Jones’ Elizabeth Street flagship refurbishment is expected to continue through to December 2019; with the recently revealed Disney-themed kid’s floor to be opened in November 2018 but further floors being unavailable until next year.

The decline is an echo of David Jones’ half-yearly results in which operating profit fell by over 37 per cent.

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