By Emma Koehn
The boss of upmarket department store David Jones says trading conditions in January have been stronger than expected, but that headwinds are on the horizon amid cost inflation and rising interest rates.
Scott Fyfe said on Monday that the business, which was recently acquired by private equity firm Anchorage Capital, is preparing for major trading events like Easter and Mother’s Day in 2023 after a robust festive season.
Chief executive of David Jones, Scott Fyfe (L) and managing director of Latitude, Ahmed Fahour, at David Jones flagship in Bourke Street.
“We traded exceptionally strongly into Christmas, [and] as a retail business we have protected our margins,” he said.
“January has surpassed our expectations, which was great because we thought there were some headwinds coming.”
David Jones joins a slew of other local retailers, including Myer, JB Hi-Fi and Super Retail Group, that say consumers have continued to spend into 2023 despite rising cost of living pressures.
But Fyfe acknowledged shoppers at David Jones were probably already feeling pressures from last year’s interest rate rises, and there were spending headwinds on the horizon “without a shadow of a doubt”.
A trading update released earlier this month for David Jones revealed sales at the department store were up by 31.8 per cent in the first six months of the year, while Country Road Group sales were up 25.6 per cent. Woolworths Holdings will retain ownership of Country Road Group after David Jones passes into Anchorage Capital ownership in March.
The department store will focus on the launch of a new credit card partnership with ASX-listed financial services business Latitude later this year, in a deal which will replace its long-running relationship with American Express.
Latitude Financial and David Jones confirmed on Monday they had inked a 10-year deal in which Latitude would provide two new credit cards to David Jones customers from September 2023.
David Jones’ previous financial services partner, American Express, was taken to court by the Australian Securities and Investments Commission (ASIC) last year over allegations it breached its obligations to properly target suitable customers with the David Jones co-branded Amex.
The regulator claimed Amex knew that cancellation rates among customers who applied for cards in David Jones were high and that some consumers were confused about whether they had applied for a loyalty of credit card, but that Amex did not review whether it was targeting appropriate customers.
David Jones chief Scott Fyfe acknowledged shoppers at David Jones were probably already feeling pressures from last year’s interest rate rises, and there were spending headwinds coming.Credit: Eamon Gallagher
The case is the first time the regulator has tested new consumer protection laws, which flip the onus of responsibility from customers reading the fine print to providers having to make sure that a product fits consumer needs.
Customers that held David Jones-branded American Express cards were told last week that the card scheme would end this year.
Fyfe told this masthead that the launch of the Latitude partnership had nothing to do with ASIC’s investigation of American Express, noting that David Jones has been reviewing new potential financial services partners since last year.
“Latitude gave us the best proposition - because it’s an omni-proposition for us. It’s digitally and physically available to our customers,” he said.
Latitude chief executive and managing director Ahmed Fahour said the company was focused on adhering to the regulatory requirements for consumers as well as providing the best possible experience for them when using the cards.
“For me, the regulatory standard is the minimum standard. There is actually something far above that, which is consumer protection,” he said.
“The last thing in the world that we want is to have somebody have a card that they can’t afford. That’s bad for everybody.”
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