DJs looks back in anger, but has eye on harmonious future
While Mark McInnes is blaming the previous Labor government for poor performances within the Premier Investments retail portfolio he now runs for Solly Lew, David Jones is still blaming him for its sliding sales and profits.
The man who replaced McInnes as DJs CEO, Paul Zahra, doesn't actually name him and the dud DJs board in Wednesday's annual results and strategic plan update but it's there between the lines as the chain struggles towards becoming a 21st-century business.
A new point-of-sale system running on electricity has replaced the previous steam-powered model, making all sorts of modern retail systems possible. There's the whole omni-channel thingy, and the idea of providing service in the shops is catching on.
Every part of the update on the strategic plan implies the previous management and board were asleep out the back of the stockroom, failing to invest in the future of the business while milking profits in what was a less-competitive retail environment. There is no guarantee the DJs makeover will achieve much. As previously argued, there are good reasons why just copying the Nordstrom playbook might not work here, but at least the current team is giving it a go.
There's also progress on DJs' welcome effort to tackle the international ripoff of Australian consumers by foreign suppliers - the euphemistic "cost price harmonisation" plan.
In other words, David Jones is working on its suppliers to be able to purchase stuff at the same price as its peers overseas.
Says the company: "A key focus of the business since the announcement of the company's future strategic direction plan has been to address the difference in pricing of international brands in Australia compared to overseas. We commenced a detailed work program to address international cost price differentials in March 2012. Cost price harmonisation negotiations have covered both new and existing international brands in our business.
"All new international brands signed up by David Jones post March 2012 have been price harmonised before entering the business. In terms of existing international brands the company identified approximately 250 brands that required cost price harmonisation. Negotiations have taken place with all of these brands and to date, 60 per cent have harmonised their prices. Negotiations remain on foot with the remainder."
Not surprisingly, the company reports the "harmonised" prices are resulting in increased sales at maintained gross margins. Just imagine that - people are prepared to buy more stuff when it is priced competitively. It clearly didn't take much to excite the DJs share price. Underlying profit was effectively flat while the bottom line and sales numbers continued to slide. DJs investors live in hope, too.