David Jones profit drops 58.3 per cent
David Jones has had a “significantly disruptive and difficult year”, with a 58.3 per cent drop in department store operating profit to $45 million, compared with $108 million at the end of fiscal 2017.
The department store achieved a flat gross profit of $820 million, but there were increased expenses due to store openings and new food formats, as well as the impact of transformational initiatives such as online replatforming and the Elizabeth Street flagship refurbishment, as well as a decreased operating profit margin from 6.3 per cent the year prior to 3.8 per cent.
The online replatforming seems to have paid off, however, with strong online sales growth of 21.4 per cent, or 5.3 per cent of sales, with the aim to deliver 10 per cent online sales by 2020 by leveraging omni-channel fulfilment centres and regional supply chain expertise.
Looking forward, the department store’s owner, South African Woolworth’s Holdings Limited, notes an “absolute focus on cost control”. It aims to reduce the cost of doing business by $25 million with a more cost-efficient and focused Australian structure, and to reduce regional operating costs in the supply chain.
The key to future success for David Jones is through brand exclusivity and private label, the Woolworth’s Holdings financial release says. The company believes such exclusivity provides “brand differentiation” and builds “brand equity”.
“We already have key exclusive arrangements … [and] have also entered into an exclusive children’s partnership arrangement with Disney, the world’s biggest entertainment company.”
Additionally, the group notes it has secured new exclusive arrangements with Scotch & Soda, Naturica, Loewe, Kenzo, Isabel Marant, Burberry Beauty and Christian Louboutin Beauty. Country Road, Mimco and Politix are to join the exclusive roster from September 2019.
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