David Jones books sharp slowdown in sales in lead up to Christmas

David Jones has suffered a severe dip in sales growth, as the nation’s $310bn retail sector battles tough trading conditions.

Shoppers at David Jones’ Boxing Day sales. Picture: Tertius Pickard.

Upmarket department store David Jones has suffered a savage slump in its sales growth in the weeks leading up to Christmas to become the latest retailer to testify to the tough trading conditions now stalking the nation’s $310 billion retail sector.

Its confessions of slower sales at its David Jones and Country Road Group stores, which include Country Road, Witchery, Trenery, Politix and Mimco, will likely heap more pressure on the nation’s biggest department store owner Myer to reveal how it has traded through the critical holiday season with investors growing increasingly nervous about consumers pulling back on their spending.

In a statement this afternoon to the Johannesburg Stock Exchange Woolworths Holdings, the South African company that owns David Jones, said total sales for the 26 weeks to December 23 had grown by 1 per cent or 0.9 per cent on a like for like basis.

This represents a sharp slowdown from the much stronger 2.9 per cent sales growth the department store enjoyed between the new financial year and November last year, with its like for like sales up until November growing by a respectable 2.4 per cent.

It means that in the lead up to Christmas its sales momentum had almost grounded to a halt. David Jones biggest store in Sydney was disrupted by refurbishment during the period but the general poor conditions in the retail sector has done most of the damage.

In its statement this afternoon that included the trading update, Woolworths Holdings said its sales performance had fallen in line with the rest of the retail sector in Australia.

Country Road, which has stumbled recently but was showing signs last year of regaining its earnings prowess, has also been hit by the retail malaise with its sales up 2.3 per cent for the six months to December 23 and like for like sales up just 0.5 per cent. This compares with total sales growth of 3.4 per cent before November, although like for like sales were also 0.5 per cent.

David Jones is the latest retailer to unveil disappointing sales figures for Christmas with Kathmandu, Kmart and PAS Group all recently issuing sales and profit warnings because of the recent dive in retail sales and consumer confidence.

Yesterday one of the nation’s leading corporate restructuring experts, Ferrier Hodgson partner James Stewart, is warning that the collapse in shopping centre traffic in the two weeks before Christmas is the worst he has seen in more than 20 years, raising the prospect of more retail failures this year.

Woolworths Holdings paid $2.2 billion for David Jones in 2014, but the business, like other fashion retailers, has been hit by poor trading conditions, as has its rival Myer which is facing weakening sales and sagging earnings.

This time last year David Jones was forced to swallow a $712.5 million impairment charge to its carrying value as the nation’s retail downturn savages sales and earnings.

Although women’s fashion chain Noni B and The Reject Shop have confirmed their sales held up over November and December, there is growing concerns that the fashion and apparel sector is struggling to maintain sales growth in the current environment.