Tough trading conditions, flagship Elizabeth Street refurbishment hurt David Jones sales

Up-market retailer David Jones has suffered a continued deterioration of its sales into the new financial year.

The retailer said the disruption from the Elizabeth Street store refurbishment, due for completion in March 2020, contributed to the decline. Picture: Bloomberg

Up-market retailer David Jones has suffered a continued deterioration of its sales into the new financial year as the tough trading conditions across Australian retail and continued refurbishment disruptions at its flagship Elizabeth Street store in Sydney punctured its sales momentum.

In a trading update provided to the Johannesburg Stock Exchange on Wednesday by its owner, Woolworths Holdings, it was revealed that David Jones sales for the period declined by 2.1 per cent for the 20 weeks to November 17.

For fiscal 2019, total sales at David Jones were weaker by 0.8 per cent.

The retailer said the disruption from the Elizabeth Street store refurbishment, due for completion in March 2020, contributed to the decline in the new financial year.

Jessica Mauboy at the David Jones Bright Night Fashion Show held at the David Jones Flagship store in Sydney this year. Picture: Christian Gilles

Comparable store sales (which include online) were 0.7 per cent lower. This is a slight deterioration in the sales performance going into 2019, where sales for the 52 weeks to 30 June 2019, were down by only 0.1 per cent.

For the first 20 weeks of fiscal 2020, online sales at David Jones grew by 68 per cent and now comprises 10.4 per cent of total sales.

Country Road Group, which is made up of fashion brands Country Road, Mimco, Politix, Trenery and Witchery, saw sales decline by 4.7 per cent for the period, impacted by the planned exit from Myer.

Comparable sales growth of 0.7 per cent includes online, which grew by 7.7 per cent, and now represents 19.5 per cent of total sales.

Recent accounts lodged with the corporate regulator revealed the losses rung up by David Jones in the past few years, with the department store chain lurching to a near $500m full-year loss in 2019 after costly impairments and writedowns triggered by the poor retail trading environment.

Successive impairments since 2018 have wiped out any profits, with David Jones racking up ­almost $1.3bn in after-tax losses in the past two years.

Woolworths Holdings in July commented that it believed the Australian retail sector was in recession, with its chief executive Ian Moir conceding the past few years at the helm of the retailer were the toughest in his career as he battled to return David Jones to growth.

However, Mr Moir — who remains in place as acting boss of David Jones and will now devote more of his time in Australia to turn around the department store — has added that he believes the worst is now behind David Jones as the group next year completes its $400m refurbishment of the Sydney flagship David Jones store which is expected to return almost $50m in profits to the chain.