David Jones shares received a pounding yesterday in the wake of a 4th quarter sale update that was a bit better than expected.
It would seem from the selling and some market chat that the retailer may have over promised to investors in suggesting that the slump was over, or, more probably, analysts and many investors got ahead of the current reality of Australian retailing.
The shares fell nearly 8%, 0r 41 cents to $4.84, in a market when the overall tone was down, but not to that extent.
Perhaps it was just the comparison with the news from Myer on Tuesday which talked confidently about its turnaround (although it has yet to produce comparable store on store sales figures, unlike David Jones).
For the full year, total sales fell 5.3%, but David Jones said they were up slightly in the 4th quarter when a fall had been expected.
David Jones reaffirmed its profit forecast for the 2009 and 2010 years, made at the end of June when it revealed that the expected big slump hadn’t really eventuated.
The retailer says it’s expecting an after tax profit rise of 20%-30% in the second half of the 2009 financial year and growth of 8%-12% per cent in the full year.
Chief executive Mark McInnes said in yesterday’s update the retailer’s trading performance in the fourth quarter was better than expected.
"Due to the fact that we did not repeat the one-off clearance of excess inventory undertaken in July 2008, we expected our trading performance in July 2009 to be significantly down on last year," he said.
"Looking at all three months in the quarter, our trading performance in quarter four 2009 was much better than expected and demonstrates a sharp, positive turnaround in our performance for the year."
Mr McInnes says the company achieved double-digit growth in cosmetics during the quarter, with colour cosmetics and fragrances trading especially strongly.
That would indicate that the stimulus spending sparked a rise in small scale purchases by customers, and not big ticket items
David Jones said 4th quarter sales 0.6% to $512.3 million, thanks to those stronger sales of beauty products.
The retailer said sales also grew in mens and womens young fashion, footwear, accessories and in the key areas of its homewares category.
All states traded well in and while David Jones’ new Doncaster store in Melbourne traded ahead of expectations and was on track to generate sales of $55 million to $60 million in its first full year of trading.
"Whilst the positive turnaround in trading performance in quarter four 2009 has been pleasing, there is still some uncertainty in relation to the future outlook," Mr McInnes said.
"Having said that, our business has a track record of being first in and first out of a downturn and our sensible investment in inventory, marketing and service means we are well positioned to leverage the upturn when it eventuates."
That honesty about the outlook seems to have also help the selling, which in all reality was profit taking from investors who have been riding the DJ’s price surge for several months now.
