David Jones and Country Road to dent parent firm's profits
High-end Australian department store chain David Jones is rarely out of the news these days, whether it’s upgrading its luxury credentials or striking a deal with Disney to turn its flagship toy department into a mini theme park.
But the headlines were less positive on Friday as the retailer’s South African owner Woolworths Holdings talked about "extremely challenging” trading conditions in the Australian market and warned that profits would be hurt as a result.
Woolworths said charges linked to its struggling Australian business will mean a full-year loss, the parent company’s first in at least 16 years.
The company also owns the Australian Country Road chain and those tough conditions meant the year to June 24 wasn’t a great one for either of the retail brands.
That said, it wasn’t the disaster it might have been and David Jones managed to drive its like-for-like sales up by 2.7% in the second half. While that wasn’t enough to rescue the full year (the difficult first half meant overall comp sales fell 0.4%), at least it showed the DJs unit is starting to turn itself around.
Meanwhile Country Road sales rose 1.7%, although its comp sales dropped by 1.8% across the business unit that includes the Country Road, Mimco, Witchery, and the Politix menswear brand, despite net retail space rising by 2.5% in the period.
However, online sales offered better news for both DJs and Country Road with a 21% leap at the former and a 20% rise at the latter. For DJs, it still means online only accounts for 5% of its total, but that should change if the latest increase is repeated for the next few years. E-sales currently account for 18% of Country Road’s turnover.
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