Upmarket department store chain David Jones plunges to $33m loss
David Jones has plunged to a $33m loss as the coronavirus pandemic kept shoppers away, particularly from its flagship CBD locations.
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David Jones has tumbled into the red after the coronavirus pandemic kept shoppers away, particularly at its flagship CBD locations.
The trading update means the nation’s two most famous department store chains, Myer and David Jones, have logged $200m in losses between them due to the pandemic.
Woolworths Holdings, the South African company that owns David Jones, on Thursday reported the chain posted a pre-tax loss of $33m for the year to June.
Losses totalled $54m for the six months to June — a period in which coronavirus restrictions sent shockwaves through the global economy — but profit gains in the first half of the financial year softened the full-year blow.
The dive into the red is a turnaround from the $37m pre-tax profit David Jones posted the previous year.
Total sales dropped 6.4 per cent to $2.06bn. A surge in online trade could not offset a drop-off in visitors to stores, particularly in CBD locations.
Total sales plunged 17.2 per cent during the six months to June, although online sales doubled over the same period to account for 18.4 per cent of all sales at the end of the financial year. “While most David Jones stores continued trading during the second half there was a significant decline in footfall, which began earlier in the half when the first signs of the pandemic affected Asian tourism during the Lunar New Year trading period,” Woolworths said.
“Footfall was down across the chain but more pronounced in CBD and tourist locations.”
Woolworths said the completion of a $200m overhaul of its Sydney flagship store in Elizabeth Street helped boost sales, although it noted the store “has not yet reached its potential due to the more pronounced effect of the pandemic on CBD locations”.
Woolworths also owns the Country Road Group, whose stable of brands includes Country Road, Mimco, Trenery, Politix and Witchery. It managed to stay profitable, logging earnings of $40m for the year to June. That was down 60 per cent on the $100m in earnings the business delivered in the previous year.
Country Road Group stores were closed for eight weeks during the three months to June. The group began reopening stores from May 21 but said the performance of CBD and airport locations “remained subdued”.
David Jones and Country Road group stores in Melbourne are still closed under the state’s lockdown rules.
The exit of the Country Road Group brands from Myer, effectively in August 2019, also affected comparable performance, Woolworths said.
As a result, sales in the second half declined by 25.6 per cent and ended the year down 14.3 per cent on the prior year.
Woolworths paid $2.1bn for David Jones in 2014 under former chief Ian Moir.
Mr Moir was replaced by former Levi Strauss boss Roy Baggatini in February but the Scotsman remains as chief of the David Jones business.
Myer last week unveiled a $172.4m full-year loss, the second-biggest in its 120 years of operations. Sales slumped 15.8 per cent to $2.52bn for the year ending July 25.