DJs all smiles as poll suits its clientele
The nation's oldest department store appears to have been flooded since September's federal election by exuberant Liberal voters happy to celebrate the victory with a new suit, dress or bottle of perfume.
David Jones is one of the few discretionary retailers to have swollen cash registers in the wake of 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.
This was thanks to certainty flowing from the change of government, a higher sharemarket and household budgets in better shape.
"September was a stand-out, so you can draw the conclusion it was driven by the election," he said. "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."
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 as a whole had all been stronger in the September quarter.
In the lead-up to the spring racing carnival, which will reach its fashion peak next week with the Melbourne Cup, David Jones had sold 200,000 dresses and plenty of women's hats. The election outcome added to people's confidence, Mr Zahra said.
"There is still a little bit of uncertainty as people are waiting to see what new policies the federal government may announce," he said.
The booming sharemarket at a five-year high had also helped consumers feel more positive about spending. But Mr Zahra warned that there still remained some uncertainty over white-collar jobs, with many consumers still cautious.
Like-for-like sales numbers, which exclude new store openings, were down 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 actually 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 since the election.
Woolworths chief Grant O'Brien said this week, after he unveiled the supermarket giant's first quarter-sales performance, that he had not seen any sales boost since the election. Wesfarmers chief Richard Goyder said a bump in sales soon after the election was momentary, with spending habits returning to pre-election levels.
Despite the poor trading conditions still in the discretionary retail sector, Mr Zahra said the business was well prepared to capitalise on the important Christmas and clearance trading periods through new merchandise partnerships, such as with British brands Harrods and Liberty.
"While it is still early days and we have to trade through the important second quarter, it is pleasing to see the company return to positive sales growth this quarter," Mr Zahra said.
The department store should also benefit from its poaching of the upmarket menswear line Hugo Boss from Myer, which is aiming for $100 million a year in sales.
David Jones' new webstore, which is a year old next week, had increased 10-fold during the quarter and had also made a positive profit contribution for the year, he said.
Across its network of department stores, NSW and Victoria had been the strongest-performing areas, with the ACT the weakest.
David Jones was now preparing for the crucial Christmas and New Year's clearance sales.
"Next week, to coincide with the launch of our new 'WOW' Christmas campaign, I will commence a nationwide store review to ensure we are well prepared, across all of our sales channels, for the Christmas and clearance trading periods," Mr Zahra said.