Falling consumer confidence, blamed on weak growth across Australian retailing, has finally hit David Jones.
The department store has reported a drop in like-for-like sales, its first under ownership of South African-based Woolworths Holdings.
The retailer, which paid $2.2 billion to the business three years ago, says full year sales increased by 1% in Australian dollar terms but fell by 0.7% on a comparable store basis.
The company says the termination of the Dick Smith electronics concession last year impacted growth by 1%. The electronics chain no longer exists as a physical store.
Overall retail space fell by a net 0.8%.
“Whilst relevant market share has grown, sales growth slowed in the second half, as falling consumer confidence resulted in lower footfall,” says Woolworths, the David Jones parent.
However, Country Road Group sales rose by 5.1% in Australian dollar terms and showed a marked improvement in the second half despite difficult trading conditions.
Like-for-like sales fell by 0.4% and retail space was down by a net 1.9%.
“Country Road’s above-market performance reflected the ongoing improvements to ranges during the year,” Woolworths said.
Woolworths says its own earnings per share will be substantially higher because of profit from the disposal by David Jones of its Market Street property in Sydney.
Scentre Group, the operator of Westfield, and Cbus Property, a subsidiary of the industry super fund, bought the CBD building for $360 million.
The site, which has long been the store’s menswear centre, is to be redeveloped with luxury apartments, offices and Westfield retailing.
Myer, the main competitor to David Jones, posted a 3.3% third quarter drop in headline sales to $653 million in May, and 2% fall on a comparable store basis.