David Jones rides coat-tails of Coalition victory with sales jump
The nation's oldest department store appears to have been flooded with exuberant Liberal voters who are happy to celebrate the election victory with a new suit, dress or bottle of expensive perfume.
David Jones is one of the few discretionary retailers to have swollen cash registers after the election in the midst of continued gloom elsewhere in the sector.
Chief executive Paul Zahra said first quarter sales were up 2.1 per cent to $424.2 million and September had been a good month for the business with certainty flowing from the change of government, a higher sharemarket and household budgets in better shape all contributing to improving sales.
"September was a standout, so you can draw the conclusion it was driven by the election but, as most people know, 78 per cent of our stores excluding CBD locations sit in Coalition seats, so that's got to be favourable to the company," he said.
Investors have pounced on the company's shares, which closed 6.6 per cent higher at $2.90. Mr Zahra said its range of Australian fashion designers was experiencing double-digit sales growth, while fashion and beauty had all been stronger during the September quarter. In the lead-up to Spring Racing Carnival, which peaks next week with the Melbourne Cup, David Jones had sold 200,000 dresses and plenty of ladies hats.
"[The election outcome] adds to people's confidence, what we know is general households, their balance sheets are healthy but there is still a little bit of uncertainty as people are waiting to see what any new policies the federal government may announce," he said.
The booming sharemarket, at a five-year high, has also helped consumers feel more positive about spending. But Mr Zahra said there remained some uncertainty over white-collar jobs with many consumers still cautious.
Like-for-like sales numbers, which exclude new store openings, were down slightly by 0.3 per cent. David Jones said disruptions caused by the refurbishment of the Canberra Centre store had cost it some sales momentum during the quarter, and excluding store works comparable sales rose 0.6 per cent.
The September quarter was the first positive growth for the department store in three quarters. Total sales in the fourth quarter were down 1.3 per cent, or down 2.9 per cent on a like-for-like basis.
Other retailers have not fared so well. Woolworths boss Grant O'Brien this week said after he unveiled the supermarket group's first quarter sales performance that he had not witnessed any sales boost after the election. Wesfarmers CEO Richard Goyder said a bump in sales after the election was momentary with spending habits returning to pre-election levels.
Mr Zahra said the business was well prepared to capitalise on the Christmas and clearance trading periods through new merchandise partnerships with British brands Harrods and Liberty.