David Jones is now focused on margins, not revenues

David Jones (ASX: DJS) has released fourth quarter and full 2013 year sales performance.

Key points include:

  • Fourth quarter like for like (LFL) sales down 2.9%
  • Full year LFL sales down 1.8%
  • Consumer sentiment continues to be weak
  • Unseasonal winter conditions have affected sales performance
  • Discounting events are being curtailed

Encouragingly, higher margin categories such as Womenswear, Beauty and Accessories improved sales in the quarter, although Menswear and Childrenswear remained flat. Home categories (electronics, furniture, etc.) were depressed. This will be partly addressed by the recent Dick Smith agreement, coming into effect this October.

CEO Paul Zahra said: “In this environment we are focusing on managing those parts of our business that we can control such as inventory, gross profit margins and costs. In addition we are also focused on the continued roll-out of our Future Strategic Direction Plan”.

So, how is this grandly named plan going? David Jones claims there is a measurable improvement in service metrics, with staff being readily able to access available inventory etc through all available sales channels – freeing time to serve the customers. E-tail appears to be going ok, although the level of sales isn’t specified.

It will be very interesting to see how the upcoming Christmas trading period performs for David Jones and other retailers, as this period usually signals major cyclical changes in consumer sentiment. The 2012 holiday trading was pretty dismal for most retailers.

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Motley Fool contributor Peter Andersen owns shares in David Jones.

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