David Jones records groundbreaking sales profit
David Jones’ sales went straight up by 12.2 percent in the first 20 weeks to November 15 of the present financial year, resulting in its best rate in the last 15 years.
In a trading update unveiled in Johannesburg on Wednesday, sales for the period grew by 10.4 percent while net space grew by 1.5 percent. The Australian reported that sales were almost ramping up 10 times faster at David Jones as compared to its arch rival Myer.
The ground-breaking sales record has been the best performance of the high-end department store since 2000, when David Jones posted a 15.7 percent increase in sales in 13 weeks to October.
With the record breaking sales of David Jones, pressure has been piling up on Myer. David Jones has also taken share from Myer and specialty retailers. As the company recently introduced new brands and changed its market strategy and service levels, these factors have boosted up its sales to a historic high.
In addition, David Jones’ South African owner, Woolworths, might have also contributed to sales boost by booking, which prompted David Jones to cut down excess stock without hurting gross margins.
"We believe inventory clearance to make way for private brands is a factor but the underlying performance is clearly robust," Deutsche Bank analyst Michael Simotas said as reported by The Sydney Morning Herald.
Meanwhile, analysts added that national, international and private label brands, which are now supported by new television and social media marketing campaigns, were helping David Jones to boost its traffic and conversation rates. In comparison, Myer posted an increase of 1.3 percent in sales for the second half of the financial year ending in June.
According to Business Insider, the Australian retail sector has been under pressure with increased costs and low wage growth rate. In addition, there has been tough competition from wide-ranging online stores. However, David Jones, under its new management system, was recording worthy sales profit.
Similarly, Myer announced a strategy shift back in September, including a $480 million capital investment and has a target of greater than 3 percent improvement in sales until 2020.
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