Analysts concerned hunt will distract David Jones

The search for a new chief executive to lead David Jones would likely disrupt the retailer's transformation into a successful omni-channel business and comes just as it enters a trading period responsible for nearly half its annual profit, analysts say.

The search for a new chief executive to lead David Jones would likely disrupt the retailer's transformation into a successful omni-channel business and comes just as it enters a trading period responsible for nearly half its annual profit, analysts say.

Recent gains in like-for-like store sales in the first quarter after years of flat to negative growth could also come under pressure.

Analysts warned on Tuesday that operational disruption at the 175-year-old department store was expected as the board sought a new chief to replace Paul Zahra, which could take more than six months.

Several elements of Mr Zahra's restructure of the business, begun in March last year, could also be challenged or changed, including a move to small-format stores, the group's online strategy, and a shift to a greater proportion of private label clothing and fashion products in the store.

However, retail insiders believe there is nothing sinister to Monday evening's announcement that after only 3½ years in the role, Mr Zahra had announced his intention to resign and would leave when a new boss was found.

Shares fell by 2 per cent when the market opened on Tuesday and closed 6¢ weaker at $2.79.

JPMorgan analyst Shaun Cousins said Mr Zahra's departure would distract the business.

"CEO succession is likely to take time with disruption expected," Mr Cousins said.

"The extensive national and international search could take at least six months, if not longer, in our view.

"Furthermore, it will occur as Myer is looking to replace CEO Bernie Brookes, who is retiring in August 2014, providing even greater competition for retail talent.

"As a result, we remain concerned that like-for-like sales growth ... could remain subdued for the remainder of fiscal 2014."

Fashion apparel business Oroton's former head Sally Macdonald is considered a front runner for David Jones along with senior DJs executives including the manager of merchandise Donna Player.

Michael Simotas of Deutsche Bank said the fact Mr Zahra would remain in his role until his successor was appointed showed his departure was his own decision.

"While this suggests there is nothing more sinister ... [it] does not signal that the group's performance is about to improve," Mr Simotas said. "We believe David Jones has demonstrated some progress in its efforts to address the structural challenges facing the business. However, sales have continued to decline ... In our view, this is unlikely to change without a permanent CEO."