David Jones warned that full year profit may fall as much as 40% due to weak consumer spending and costs of a new strategy to arrest declining sales.
Releasing the company’s first half results, Chief Executive Paul Zahra announced plans to open six department stores, cut costs and offer more products online, as part of a strategy to return to modest profit growth next year.
The company said net profit for the year ending 31 July will fall between 35% and 40%, implying earnings of $100.9m to $109.3m.
First half profit fell 20% to $85m from $105.7m a year ago, and first half sales dropped 6.7% to $1.01bn from $1.08bn a year ago.
The company said its full year profit would be hit by costs associated with its “Three Point Strategy” plus challenging trading conditions and the cost of clearing excess inventory.
Retail is a tough sector right now, sale are down across the board and with consumers looking to reduce debt and concerned about loss of employment this trend will continue for some time.
If you hold retail stocks, continue to hold for the long-term but now is not the time to buy.
David Jones share price fell 30% on the back of the announcement, the stock is now trading at levels last seen at the bottom of the GFC.
For more information on David Jones please contact us on 07 4771 4577.
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