FLAT IS THE NEW UP: David Jones Shares On A Tear On Online Wins

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David Jones is the biggest winner on the ASX this morning, with shares jumping more than 6% after it reported being well on its way to becoming a bricks-and-clicks business.

The retailer posted a FY13 after-tax profit of $101.6 million, excluding costs of a major deal to transfer the management of its electronics business to Dick Smith. David Jones posted an after-tax profit of $101.1 million last year.

Investors saw David Jones’ flat profit as a win, especially after its previous warnings that warm weather and weak customer sentiment were driving down sales.

David Jones has battled what CEO Paul Zahra described as a “difficult trading environment” for some time, reporting a 39.9% profit drop this time last year.

Since last March, Zahra has led the retailer on a major transformation program to shift the business away from its traditional bricks-and-mortar model, and tackle online competitors head-on.

David Jones announced today that its online sales had skyrocketed since it updated its online store, launched a mobile site, and upgraded supporting systems.

As reflected in the chart on the right, David Jones’ online sales grew 290% in 2Q13, 520% in 3Q13 and 711% in the most recent quarter.

“The company’s average online order is three times the value of its average in-store transaction value,” the retailer reported.

“Online business is expected to deliver a profit contribution within its first full year of trade, pre-depreciation.”

Shares closed at $2.850 yesterday and were at $3.025 by about 12.30pm today.

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