David Jones boss Paul Zahra said the upmarket department store had noticed a slight improvement in its sales trajectory in the weeks after the federal election but he still expected next year to be challenging, with better times for discretionary retail unlikely to emerge until 2015.
Mr Zahra will also harness new technologies, a better grasp of the online world and other innovations at his bricks-and-mortar stores to prepare David Jones for the much-awaited return of buoyant trading conditions that have been mostly absent since the financial crisis.
Unveiling a 6 per cent slide in full-year net profit to $95.2 million for the year to July 27, Mr Zahra updated the market on his grand plan to transform the 175-year-old department store into a leading online player by creating a seamless omni-channel platform linking the physical stores to its online site.
In fact, David Jones' legacy of bricks-and-mortar stores looks likely to provide a sizeable earnings kick in coming years with Mr Zahra also revealing it would seek to exploit the "air rights" above its Market Street store in Sydney to develop apartments or a hotel.
Mr Zahra was tight-lipped on the opportunities being explored with developers but said the property cycle was starting to turn, with the fact David Jones owned its flagship stores meaning a property deal could be on the cards.
Reporting the full-year results, in which underlying profit rose 0.5 per cent to $101.6 million once the impact of a $9.1 million charge relating to its deal with Dick Smith to hive off its electronics category was stripped out, Mr Zahra said there had been an uptick in performance since the change of government.
"We have seen an improvement in our tracking rate since the election," he said. "But it is early days."
He said a sustained shift in consumer sentiment flowing through to better sales would likely occur only once the government had fully announced and implemented its policy agenda.
"We have said that fiscal 2014 will continue to remain challenging. I think until the government enunciates their policies there is still a level of uncertainty, and we expect fiscal 2015 to obviously be a better year based on what we know to date."
Cost of doing business to sales rose 110 basis points to 32.9 per cent during the year with the jump blamed on a rise in wages, provisions for executive incentives and investing in customer service.
Deutsche Bank retail analyst Michael Simotas said the underlying profit was about 4 per cent ahead of consensus expectations.
"Costs were slightly below our expectations but a key disappointment for us was the much weaker-than-expected gross margin expansion," he said.
"Second-half gross margins only grew by 45 basis points, which was notwithstanding a very easy base comparison (down 140 basis points in the second half of 2012). We wouldn't be surprised if this drives downgrades to consensus earnings in fiscal 2014."
David Jones declared a final dividend of 7¢ a share fully franked, taking the total payout for fiscal 2013 to 17¢ a share fully franked.