DJs hopes for post-election sales bounce
David Jones boss Paul Zahra has welcomed the certainty delivered by a clear victory to the Coalition in last weekend's federal election, saying the outcome should bolster consumer confidence.
"I think there is at least certainty in government and that's a positive - anything that restores consumer confidence is a good thing," Mr Zahra said on Thursday as he opened a new small-format "village" David Jones store in Melbourne's affluent Malvern suburb.
"But equally, we know post election there is a time to articulate policy and I think people are waiting for that."
He said 78 per cent of David Jones stores were in electorates held by the Coalition. "And we think that, over time, obviously that's a good thing for the brand."
The new store opened by Mr Zahra and the chain's ambassador, model Megan Gale, represents a key plank of the company's turnaround strategy, as it grows its network through the creation of more small-format stores, which have a greater emphasis on high-margin categories such as fashion and beauty.
It marks the first small-format store of its kind for David Jones in Victoria, and the model is forecast to generate about $2 million in earnings before interest and tax a year, against earnings of $5 million from new larger stores.
Much of the earnings boost will come from the space allocated to high-margin categories such as fashion, with many low-margin goods standard in the larger city and suburban stores not available in the village model.
Mr Zahra said the Malvern Central store had a 75 per cent weighting to fashion and beauty across its trading floor, with 25 per cent allocated to home and housewares.
This compared with a 60-40 split at a typical larger-format suburban store.
"We get a better gross profit per square metre as a result," Mr Zahra said.
David Jones is gradually shifting the focus of its existing stores to have more space devoted to higher-margin products. The new store is also laden with technology, including complimentary Wi-Fi, an internet cafe and an interactive mirror that sends photos across social media platforms, to give customers immediate fashion advice and feedback from friends on Twitter or Facebook.
The Malvern store draws in shoppers from upper-income suburbs such as Toorak and Armadale and has been complemented by a range of new specialty, upmarket shops that have also opened nearby.
The 7500-square-metre site was rented to Wesfarmers' struggling discount department store Target.
Malvern Centre owner UniSuper is taking the shopping centre upmarket.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free