Markets: Goldman's DJs shopping spree

Funds associated with the Wall Street firm clocked up a 5 per cent stake in the retailer today, despite the sector's downward trend.

Goldman Sachs may be betting on Paul Zahra.

Between April 15 and August 13 this year Goldman, on behalf of itself and its subsidiaries, announced to the ASX it has accumulated a 5.2 per cent stake in David Jones. The funds involved include Goldman Sachs Australia Managed Funds, Goldman Sachs Asset Management, Goldman Sachs & Co., Goldman Sachs International and parent company Goldman Sachs Group Inc.

Goldman may have bought shares in David Jones on behalf of clients or it may as a company have decided to take a stake in Australia’s second-biggest department store chain. Goldman Sachs did not return Market Spectator's requests for comment.

David Jones’ sales in the three months to April 27 fell to their lowest level in eight years. Since April 15, when Goldman Sachs started buying shares in David Jones, the stock has fallen 2.5 per cent. At 1003 AEST today David Jones shares were down 3 cents, or 1.1 per cent, to $2.77.

Australian consumer sentiment remains weak. Shops in the trendy Sydney suburb of Paddington have closed, unable to cope with high rents and declining foot traffic. More people are shopping online for clothes, often ordering items through US-based clothing companies. Billionaire Frank Lowy’s decision to sell his entire stake in Westfield Retail Trust is a signal, says fund manager Pengana, that the Australian retail market is in decline.

There are nine sell recommendations on David Jones shares, five hold recommendations and just two buys, according to Bloomberg data. Goldman Sachs analyst Phillip Kimber has a 'sell/neutral' recommendation on the company, according to Bloomberg.