David Jones to stop the music as part of retail overhaul

DAVID Jones will stop selling DVDs, music and video games as part of a move to shed low-performing categories, it announced after releasing its results for the quarter.

The retailer reported a 1.4 per cent drop in total sales revenue to $590.1 million during the Christmas season.

David Jones chief executive and managing director Paul Zahra said the results for the quarter, which included the Christmas period, reflected growth in high-margin categories such as womenswear, beauty and accessories.

But he said that the company's sales performance was adversely affected by products in home categories such as electronics.

Shares dropped 1.9 per cent to $2.63 in early trade, but closed half a cent higher at $2.69.

"Our focus is on improving the profitability of sales. We are exiting the low-performing categories of DVDs, music and games," Mr Zahra said.

"We also continue to reduce the depth and breadth of our promotional discounting events and continue to work on changing our category mix to increase focus on higher-margin categories."

About 35 per cent of floor space at a David Jones store is dedicated to home categories such as furniture, homewares and white goods, while the remaining 65 per cent is used to stock fashion and beauty products, a company spokeswoman said.

The department store plans to reduce the floor space for home category items to 25 per cent. A decade ago, products in the home categories took up 45 per cent of a store's floor space.

Sales revenue for the six months to December was down 0.7 per cent to $1 billion from the previous corresponding period.

The second quarter of sales revenue stretches from October 28, 2012, to January 26.

Last year, the department store's departing chairman Bob Savage said the firm was expecting flat sales during the holiday period, with consumer sentiment remaining weak despite the Reserve Bank's interest rate cuts in October and December.

Commonwealth Bank retail analyst Andrew McLennan said that while the headline results were disappointing, the key profit drivers of the stores, such as fashion and beauty, had performed reasonably.

He welcomed David Jones' focus on improving its sales profitability while incurring significant costs from upgrading the point-of-sale systems and investing in omni-channel retailing.

Consumers have increasingly moved towards online shopping downloading music and films, leaving traditional retailers such as David Jones struggling to profit from the entertainment sector.

Sales of traditional retail video games fell 23 per cent last year, as consumers turned to digital downloads and game apps, data from market researcher NPD Group Australia showed this week.