David Jones and Country Road sales smashed by COVID

David Jones sales dive by one-third and Country Road Group suffers a 50 per cent collapse in sales.

The sales update provided by Woolworths Holdings for the second half showed the full pain of the emergence of COVID-19 from March. Picture: Getty Images

Upmarket department store David Jones saw sales shredded by more than one-third at the peak of the coronavirus pandemic lockdowns, despite its stores staying open through the crisis, while its Country Road Group suffered a 50 per cent sales collapse as its stores were shuttered.

David Jones has also revealed in a full-year trading update issued on Friday afternoon that foot traffic at key CBD stores was well down, especially as tourism dried up and city workers set up home offices although as restrictions were eased there was an improvement for its chains from around May.

However, David Jones as well as its stablemates Country Road, Politix, Trenery, Mimco and Witchery, are wearing the painful bruises of massive disruptions to its stores, CBD traffic and the state of mind of the consumer as the nation’s battles the economic and health crises triggered by COVID-19.

In a full-year trading update Woolworths Holdings, the South African retail conglomerate that bought David Jones and full ownership of Country Road Group for more than $2.2 billion in 2014, said the business had been dented by the pandemic.

“The extremely challenging trading conditions brought about by COVID-19 placed significant pressure on the performance of the group,’’ it said.

For the full-year David Jones total sales were down 8 per cent while same store sales growth was slightly better only down 6.9 per cent. Country Road Group was worse hit, driven partly by its decision to temporarily close down stores during the pandemic while David Jones remained opened, with its total sales down 15.7 per cent for the full-year and same store sales down 8.7 per cent.

The sales update provided by Woolworths Holdings for the second half showed the full pain of the emergence of COVID-19 from March, the implementation of lockdowns, shutting down of international tourism and directives for Australians to stay at home.

In May, the tough economic conditions saw David Jones win a waiver from its lenders on its debt covenants and handed a $75m loan from its parent company, South African’s Woolworths Holdings as it suffered a double digit collapse in sales through the worst of the coronavirus pandemic.

Woolworths Holdings said David Jones sales were up 0.5 per cent for the first nine weeks of the second half, but down 35.8 per cent for the second eight weeks of the second half and down 8.1 per cent for last nine weeks of the June half.

Stores closed

For Country Road Group the sales dive was sharper, as its stores were closed. Country Road Group sales were up 1.7 per cent in the first nine weeks of the second half and then accelerated as stores were shuttered to be down 50.4 per cent in the second eight weeks, and then recovered to be down 20.9 per cent for last the last nine weeks of the second half.

“David Jones sales in the last nine weeks of second half declined by 8.1 per cent relative to the prior year, an improvement on the prior eight-week period, as restrictions began to ease in most parts of the region resulting in a gradual improvement in foot traffic,’’ Woolworths Holdings said.

“The decline in store sales was partly mitigated by the significant shift to online, which saw the channel growing by 100.7 per cent in the second half, and contributing 18.4 per cent to sales.”

It said its flagship Elizabeth Street store redevelopment in Sydney has been completed with all floors trading from April 4.

“While the impact of lower foot traffic and the decline in tourism has been more pronounced in the CBD locations, the store is trading ahead of the remaining David Jones store portfolio.”

Country Road Group, which began a phased reopening of stores from May 21 following a two-month closure, saw sales in CBD and airport store locations continue to be significantly impacted. Online sales remain strong, growing by 28.1 per cent in the second half, and contributing 33.5 per cent of total sales.

The exit from Myer in August coupled with the closure of unprofitable stores at lease expiry resulted in a 5.3 per cent reduction in Country Road Group’s retail space.

“The pandemic remains a part of our daily lives, and continues to disrupt our local and international supply chains, our store operations, and the availability of products and services to our customers.”