Rising consumer confidence is lifting sales despite Covid-19 hit

David Jones is facing shrinking traffic across its CBD stores as lockdowns bite but the retailer said consumers are still spending up big.

David Jones store in the CBD Sydney has been impacted by the city’s lockdown. Picture: NCA NewsWire / Gaye Gerard

Upmarket department store David Jones has seen consumer confidence improve despite the pandemic, with closed borders preventing Australians from travel overseas driving higher “inward focused consumption”.

This has seen a rebound in sales for David Jones, as well as the Country Road fashion group which is part of the same retailer, with second half sales for the department store better by more than 17 per cent. However, the retailer is expected to see its profits shaved by writedowns and impairments linked to the closure of its food business.

The comments were made in an market update by Woolworths Holdings, the South African retailer that owns David Jones. While they share the same name, there are no links between Australia’s Woolworth and the South African group.

The South African retailer, which also owns the Country Road Group of fashion chains, has updated investors as its stores there are impacted by the recent riots and civil unrest in the African state with it also providing a trading update for its Australian businesses for the 52 weeks to the end of June.

In South African Woolworths Holdings reported that many of its stores had been closed by the rioting of the last few days and that 11 of its stores through the country had been looted, including a distribution centre looted by locals.

The picture in Australia seems more rosy and although the company’s stores here had been closed by lockdowns, the economic outlook looked more promising.

“In Australia, stronger economic fundamentals, improved consumer confidence and restrictions on international travel, supported inward focused consumption and buoyed retail spend,” Woolworths Holdings said in a statement to the South African stock exchange.

“This was despite the intermittent snap lockdowns across major cities and an extended three-month lockdown in the State of Victoria during the first half of the current year.”

However, tourists and CBD traffic is a main driver of sales for David Jones and the spate of lockdowns and shut down of international travel had impacted its city stores.

“Footfall in central business districts and airport locations remains well below pre-Covid-19 levels.

The company said David Jones sales over the 52-week period increased by 2.3 per cent and by 0.9 per cent in comparable stores, with second half sales up by 17.1 per cent. Online sales increased by 24.4 per cent and contributed 17.3 per cent to total sales for the current year.

In line with its stated intention of exiting unproductive space, trading space was further reduced by 6.3 per cent. Sales in its flagship David Jones Elizabeth Street store grew by 16.6 per cent during the current year.

Country Road Group, which takes in Country Road, Mimco, Witchery, Politix and Trenery, delivered strong sales growth of 13.4 per cent over the current year and by 15.3 per cent in comparable stores, with second half sales up by 39.5 per cent.

This result was underpinned by the robust performance of the Country Road brand and through refreshed product offerings across all brands, the company said.

Online sales increased by 30.7 per cent and contributed 29.7 per cent to total sales, while trading space was reduced by 2.8 per cent for the current year.