MARKETS SPECTATOR: David Jones downer

David Jones is leaning on Chinese visitors in a bid to boost its falling sales.

David Jones is trying to offset a tight fisted Australian consumer with a profligate Chinese one.

The up-market retailer says it will be the first Australian department store to accept Chinese credit and debt card UnionPay beginning May 29.

This “represents a good sales opportunity for us given that over 700,000 Chinese nationals visit Australian annually," the company said in an ASX statement. “The average transaction size on the UnionPay card is the highest in the world”.

The 175-year old David Jones is trying to bolster sales with Chinese tourists as Australian consumer spending is described by chief executive Paul Zahra as “cautious”.

Today the company said its third-quarter sales, January 27 to April 27, fell 2.2 per cent to $391.1 million compared with $399.8 million a year ago. Like-for-like sales were down 34 per cent $386.2 million compared with $399.8 million. Like-for-like sales include those at Canberra Centre store whose sales were disrupted due to refurbishment. But they exclude the new Highpoint, Victorian store which opened in March this year.

At 1023 AEST David Jones shares were down 12 cents, or 4.7 per cent, to $2.46, while the S&P/ASX 200 Index had fallen 41.199 points, or 0.8 per cent, to 4,942.30. David Jones' stock is down 9.9 per cent over the last 12 months compared with the S&P/ASX200 Index which is up 23 per cent over the same period.

“The unseasonably warm start to winter impacted our business in particular women’s wear,” Zahra said in a statement.

Zahra expects “heavy discounting” by competitors as they expect to address winter inventory issues. “We do not propose to match this expected discounting activity (but) our key June clearance will need to be competitive,” he said.

Meanwhile, the David Jones chief says brands such as Givenchy, Pucci, Joseph, Finders Keepers, Gumboots and Sunseeker have converted their distribution agreement into store exclusive agreements.

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