Major listed department store chain, David Jones has reported its best ever full year profit result and dividend since listing in 1995.
The upmarket retailer also met its upgrade guidance for the 2008 profit, which was boosted in August when the full year’s sales figures were released.
The company lifted its profit by 25.1% to $137.053 million for 2008 and declared a final dividend of 16c per share fully franked, up from 13c in the final half of 2007.
That took the total payout for the year to an all time high of 27c a share from 23c in 2007.
The shares traded through a range of a high of $4.47 and a low of $4.31, before closing steady at $4.39.
The group also confirmed its previous guidance for the coming 2009 year of a 5%-10% rise in profit.
As it warned in August though, the 2009 increase won’t come easily, it will be on the back of "2 – 3 quarters of flat to negative (like-for-like) sales growth in fiscal 2009 plus sales from the new Doncaster store" in Melbourne, which was on track for opening on October 18.
David Jones Chief Executive Officer Mark McInnes said in a statement to the ASX that: “We are prepared for three tough quarters at the commencement of FY09 (as we were prepared in 2H08).
“We have worked extensively to ensure that our Cost Efficiency initiatives and our Inventory management are on track to address the expected slow trading environment in FY09.
“We are eight weeks into the season and our sales are tracking to budget.
"We have not seen anything to date within the retail environment that Access Economics did not predict or that we did not expect.
“We are confident of achieving our guidance of at least 5% – 10% PAT growth in FY09.” Mr McInnes said.
Mr McInnes said that "Our performance during the recent slowdown in 2H08 demonstrates the ability of our business model to continue to deliver profit and dividend growth throughout the economic cycle.
"Our confidence in our ability to continue delivering growth in shareholder returns is bolstered by the progress we are making in the implementation of our FY09 – FY12 Strategic Plan."
As reported last month 2008 sales revenue rose 5.8%, from $1,983.2 million in 2007 to $2,098.0 million in the year to July.
On a like-for-like basis, sales grew 4.5% over 2008 from 2007, although it slowed sharply in the last quarter to where it was barely ahead.
DJs said that 2008 Earnings Before Interest and Tax (EBIT) was $212.9 million up 21.0% from 2007’s $176.1 million. The ‘EBIT margin was was 10.2c in the dollar, up 1.30c on 2007.
The company said its Financial Services business continued its solid performance track record, reporting growth of 6.3% in EBIT to $38.4 million in 2008 from $36.1million the year before.
Mr McInnes said the retailer was facing a "very challenging retail environment", particularly in the present second half of 2008.
"Our performance during the recent slowdown in the second half of 2008 demonstrates the ability of our business model to continue to deliver profit and dividend growth throughout the economic cycle," Mr McInnes said.
"Our confidence in our ability to continue delivering growth in shareholder returns is bolstered by the progress we are making in the implementation of our FY09-FY12 Strategic Plan."
The company’s said its existing bank facility of $350 million extends until 2012. This facility was put in place at the time of the unwinding of the Sale & Leaseback arrangements relating to David Jones Sydney and Melbourne CBD flagship stores.
"The facility ensures that the interest payments on the entire $350 million debt are lower than what the escalating rent payments would have been under the Sale & Leaseback arrangement.
"Given the Company’s strong financial disciplines, the business has only drawn down $170 million as at the end of July 2008 (allowing for the Store Card receivables which were transferred to American Express on 1 August 2008).
"The Company’s cash position is strong and sustainable, with significant future investment in the Company’s core business by external stakeholders, without requiring additional debt funding."
But while there was a higher payout for shareholders (total payout is around 94% of profit), they are losing one major benefit: the rewards program.
"Over the past 12 months the Company has undertaken a detailed review of “Shareholder Discount Programs” offered by publicly listed companies in particular listed retailers.
“The key finding of this review highlighted a distinct movement away from Shareholder Discount Programs with companies such as Wesfarmers, Woolworths, Harvey Norman, JB Hi Fi and many others not offering a shareholder discount scheme."
(All those companies are rival retailers!)
The Company’s said the board places great importance on rewarding all shareholders (regardless of whether they are listed institutions or retail shareholders) and their focus is to deliver this via profit growth and dividend growth.
"In the interests of generating value for all shareholders and given the broader industry movement away from offering shareholder discounts, the Board has decided to conclude the Company’s shareholder rewards program effective from 1 February 2009.
"In return, current members of the Company’s shareholder rewards program will receive an exclusive offer relating to the David Jones American Express card in addition to a number of attractive benefits under the new David Jones American Express card when it is launched in early October 2008.
"This decisio
