from: Herald Sun
David Jones chief Paul Zahra during preparations for the 175th anniversary exhibition at David Jones, Sydney. Picture: James Croucher Source: News Limited
DAVID Jones chief Paul Zahra says he is chasing profit rather than turnover as the embattled retailer racks up its worst quarter for sales since 2011.
And Mr Zahra has hinted that the group's strategy of cutting back on promotions and discounts is yielding rewards.
But the department store chief has failed to reassure investors that earnings are growing, in spite of his profit pursuit.
Speaking as the high-end chain published its third-quarter sales figures yesterday, Mr Zahra declined to offer a profit forecast.
The weak quarterly result has piled further pressure on Mr Zahra, as impatient shareholders are asked to keep faith.
Mr Zahra said despite heavy discounting from other retailers, the group had continued with its strategy of scaling back "unprofitable" promotions in the three months to April.
While the chain would run its traditional winter stocktake sale next month, Mr Zahra said careful inventory control meant David Jones would not have to discount as heavily as in the past.He said the business was committed to removing the "band-aid" of using unsustainable discounts to drive sales.
"It's easy to turn sales on by discounting, but it's about profit. That is what investors are looking for," Mr Zahra said.
David Jones reported sales of $391.1 million for the April quarter, down 2.2 per cent from the same period a year earlier.
Like-for-like sales, which strip out the impact of stores that have opened or closed, fell 3.4 per cent.
It was the worst like-for-like sales result since the three months to October 2011.
David Jones again trailed rival Myer, which last week reported a 0.5 per cent lift in sales to $652.5 million.
Mr Zahra said continuing weakness in home electronics had weighed on sales, and David Jones was continuing with plans to cut the category back.
An unseasonably warm autumn had also hit demand for womenswear, with the traditionally strong segment declining for the first time in many years.
Citi analyst Craig Woolford said if there was light at the end of the tunnel, it was still some way away.
"The result showed David Jones sales trends have deteriorated compared with Myer, despite positive wealth effects (such as lower interest rates) for households during the quarter," Mr Woolford said.
"We expect David Jones' like-for-like sales to continue to decline over the next 12 months."
After opening sharply lower, David Jones shares recovered ground in later trading to end the day 0.8 per cent lower at $2.56.
Myer shares closed down 1.2 per cent at $2.46.