David Jones announces it will close stores ‘aggressively’ as its profit plummets by 42 per cent
- David Jones’ CEO has announced ‘aggressive’ store closure are on the horizons
- Department chain recorded profit loss in the tens of millions for financial year
- The company now aims to cut down floor space by up to 20 per cent
Major department store David Jones will begin to ‘aggressively’ close stores after its profit fell by 42 per cent.
Operating profit dropped from $64 million to $37 million over the last financial year.
The loss prompted the company’s owner, Woolworths Holdings, to announce it would be cutting David Jones’ floor space by 20 per cent by 2026.
Major department store David Jones (pictured) will begin to ‘aggressively’ close stores after recording a profit loss of $27 million in the last financial year
The loss prompted Woolworths Holdings chief executive Ian Moir (pictured) to announce they would be cutting David Jones’ floor space by 20 per cent by 2026
The company will negotiate with landlords over their 47 Australian stores and hope to get out of existing leases earlier.
‘You have to create partnerships with some landlords and take a more aggressive stance with other landlords, but we are absolutely focused on getting our space down,’ said chief executive Ian Moir.
David Jones’ gross profit margin for the 53 weeks to June 30 was 1.1 per cent down on the the prior period as a result of higher markdowns and an increased focus on clearance.
Turnover and concession sales declined by 0.8 per cent, with comparable store sales 0.1 per cent lower.
Store costs increased by 1.9 per cent, but other operating costs were 6.6 per cent lower as a result of various cost savings initiatives.
Regional stores look to be the first ones to be targeted for closure as well as the possibility of cutting floor levels from larger stores.
‘In some of those big stores, we’ve got a lot of space we don’t really need because the model has changed. So we can have a much more profitable offer on much less space,’ Mr Moir said.
Comparable sales dropped by 0.1 per cent while overall revenue also took a hit of 0.8 per cent, or $2.2 billion.
While in store sales were seeing a slump online sales saw a 46.8 per cent growth and now makes up 7.7 per cent of total sales.
‘Throughout the Group, we have adapted our strategies to the shifting retail environment,’ Mr Moir said in an official statement.
‘Our businesses are well-positioned to see through the significant economic and structural challenges retailers are facing. We are focused on building future-fit, customer-focused businesses with strong portfolios of brands that deliver long term value.’
While in store sales were seeing a slump online sales saw a 46.8 per cent growth and now makes up 7.7% of total sales (stock image)