David Jones Limited: We knew it was bad, but not this bad

David Jones Limited has reported like for like sales have slumped 11 per cent. We've long been warning about the retail sector's death spiral as they face secular headwinds. The shares might look cheap, but there are better companies to invest your cash.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

David Jones Limited (ASX: DJS) has reported like for like sales have slumped 11 per cent for the three months to October 29. Not surprisingly the shares are down 4 per cent to $2.85.

An 11 per cent fall in sales is quite alarming. We've long been warning about the retail sector's death spiral, with Investment Analyst Dean Morel saying back in July "…while the death of DJs and many other retailers is not imminent, it is inevitable."

Even yesterday we were warning about classic value traps, naming companies like Myer Holdings (ASX: MYR), Harvey Norman (ASX: HVN) and OneSteel (ASX: OST). Little did we know how quickly we might be able to add David Jones to that list.

David Jones' chief executive David Zahra blames the "wealth effect" for their poor trading – volatility in sharemarkets, a weak housing market and employment uncertainty.

If nothing else, this and news from Woolworths Limited (ASX: WOW) of subdued trading all but locks in an interest rate cut in December.

David Jones are sticking to their knitting, targeting high-end consumers. We wish them luck, especially as these tough economic conditions are not going to turn around any time soon, and internet shopping is only going to grow and grow.

Even at what looks like an attractive valuation, we're happy to pass on them, much preferring to invest our hard-earned money into growing companies, not ones facing secular headwinds.

If you are looking for a growth company trading at an attractive price, request a copy of our free report The Motley Fool's Top Stock For 2012. Its shares have fallen 15 per cent in the past 6 weeks, but we're not perturbed, especially as the fully franked dividend yield has snuck above 6 per cent. Click here to request your free report today, whilst it's still free, and before it's too late.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »