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David Jones profit tumbles over holiday period

David Jones’ profit before tax fell 29.4 per cent in the six months to 23 December 2018. The struggling department store posted $47 million in profit before tax in the first half of FY19, compared to $66 million in the previous corresponding period, which was itself 37.7 per cent down on the previous year.

South African parent company Woolworths Holdings indicated that it was unlikely that trading conditions will improve in the short-term in Australia, where it has suffered from the constrained consumer sentiment.

Revenue rose 0.1 per cent over the half, while sales increased 1 per cent, having slowed along with much of the market after the Black Friday sales period.

The business’s comparable store sales grew 2.4 per cent for the first 20 weeks of the half, but fell 0.8 per cent in the final six weeks.

Much of the growth from new stores was offset by the Elizabeth Street store refurbishment, which has been under construction since 2017 is set for completion by the end of this calendar year.

Woolworths Holdings chief executive Ian Moir told CNBCAfrica that, in hindsight, he believed the group overpaid for David Jones, when it acquired the retailer in 2014.

“I certainly wouldn’t go for the same deal… We overpaid for it at the top of the market, and we recognise that,” Moir said.

“It’s a great business and we can turn it around, we will get there, [but] with the benefit of hindsight I wouldn’t have paid so much.”

Moir will be stepping in temporarily to fill the shoes of former-chief executive David Thomas, who resigned for personal reasons earlier this month.

“We’ll to seek to replace David in time, not going to rush into it, want to get the right person for that job,” Moir said.

“We’ll look at both internal and external candidates for that role. But the strategy isn’t changing.”

Fashion label Country Road saw sales grow 2.3 per cent over the six months, with comparable sales seeing a 0.5 per cent increase.

Revenue increased 0.7 per cent to $572.6 million, while gross profit grew 1.2 per cent to $366 million.

A strong gross profit margin of 63 per cent, led by higher full-priced sales and improved sourcing, pushed operating profit for the business up 3.4 per cent to $61 million.

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