David Jones accelerates sales momentum

The department store chain is gaining further sales ground against rival Myer.

David Jones and Country Road have staged an earnings turnaround since being taken over by Woolworths Holdings. Picture: Grant Turner/Bloomberg via Getty Images.

Up-market department store chain David Jones is continuing to book strong growth in sales as it streaks ahead of rival chain Myer in expanding its retail turnover.

After nearly two years under the ownership of South African retailer Woolworths Holdings, David Jones has accelerated its already rosy earnings momentum.

In a trading update unveiled in Johannesburg, Woolworths said David Jones sales had rocketed 8.4 per cent higher in Australian dollar terms over the year ending June.

Sales in comparable stores bounced 7 per cent higher as retail space grew 3.5 per cent.

The strong retail push comes despite the department store giant most recently contending with a late start to winter, with unseasonably warm weather Down Under.

Shaky consumer confidence is another recent headwind, as shoppers closed their wallets in the wake of the Federal Budget and amid the election campaign just passed.

ABS data shows retail trade rose 0.2 per cent in May after a 0.1 per cent lift in April. Turnover is up 3.3 per cent year-on-year.

Sales across the Woolworths Holdings’ Country Road Group in Australia, New Zealand and South Africa — which includes the Witchery and Mimco brands — increased by 5.5 per cent in Australian dollar terms. However, sales in comparable stores were 3.9 per cent lower.

Country Road’s net retail space grew by 6.1 per cent, nearly half of which was space reallocated from other brands in David Jones.

The bumper trading results put David Jones far ahead of rival Myer, which, despite a better-than-expected like-for-like sales increase of 3.4 per cent for the May quarter, is struggling to achieve similar sales growth.

Myer is on course to deliver its third successive year of same store sales growth after posting a meagre 1.2 per cent lift in sales for 2014, and 1.1 per cent rise in like-for-like sales in 2015.

Last year David Jones boss Iain Nairn made a surprising and unexpected exit from the company and will be replaced by former Marks & Spencer veteran John Dixon.

In 2014 Woolworths Holdings paid $2.1 billion for the 177-year old David Jones retail chain. It also paid retail mogul Solomon Lew more than $200 million for his minority stake in Country Road.

Both the department store chain and Country Road have staged an earnings turnaround since being taken over by Woolworths Holdings. In contrast, Myer has had to unveil a $600 million turnaround strategy for the retailer that included a $221 million capital raising after ongoing underperformance.

Myer chief executive Richard Umbers, who came to the top job 18 months ago, on Wednesday claimed the troubled department store operator could reclaim its “relevance” among local shoppers as it looks to a new strategy to fight off international rivals and the threat of online competition.