Weak consumer spending continues to batter Australia's retail sector, causing a 40 per cent slump in profits for David Jones and some of the leading local retailers to considering moving out of the country.

David Jones on Wednesday a full year profit of $101 million which caused a 40 per cent decline in profit that was due to the 4.8 per cent dip in sales to $1.87 billion. The decline, however, did not surprise David Jones which had anticipated weak sales in their recent forecast.

The reduced profit led the retailer to cut its final dividend to 7 cents from the interim dividend of 10.5 cents.

Paul Zahra, chief executive officer of David Jones, admitted the challenging retail conditions partly caused the sales and profit decline. However, he said the company is prepared for the 2012 spring and summer season.

"Our company remains in a strong financial position with low debt. We have a strong balance sheet, solid cashflows and ownership of our Sydney and Melbourne CBD properties," Mr Zahra said in a statement.

However, Mr Zahra also disclosed that David Jones is reviewing ownership of four properties in Melbourne and Sydney central business districts which occupy 85,000 square meters of retail space and valued at $460 million.

Property consultant Cushman & Wakefield, in an independent review of the David Jones properties, based on an in implied rental of $39 million for the four properties yearly, estimate the potential worth of the four assets to $612 million.

To counter the weak retail market, David Jones previously rolled out a plan to expand shopping options for consumers by offering more items online and via mobile devices. The goal was to boost items available online by March 2013 to 90,000 from 9,000.

While David Jones aims to win the retail war, some local retailers appears to have given up on the Australian market based on reports that retailers are being advised to move out of the country for a lower-cost nation.

"There's lots of advisers going around speaking to thousands of retailers at the moment saying 'just set up in Hong Kong and ship into this country," Harvey Norman Managing Director Katie Page said Wednesday at a Melbourne conference.

"I think that is just the worst thing an Australian company could do. It could solve a lot of problems but, you know, if Harvey Norman did that, everybody else would follow. And that's wrong," Ms Page said.

Instead of moving out of Australia, Harvey Norman is insisting that the goods and services tax imposed on imported goods should be collected for items purchased online valued below $1,000.

"The GST pays for health, education, infrastructure, roads - that's our tax structure, and everyone you meet says 'I shop overseas so I don't have to pay GST, and Australian retailers are charging 30 per cent more anyway', but they don't understand that there's also duty, compliance costs and a lot of other things in that price other than the GST," Ms Page stressed.

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