Among the trio of retailers reporting profits or sales figures yesterday, David Jones got most attention because of its position in the market and the recent harassment claims against the company and former CEO, Mark McInnes, which forced his resignation.
No doubt that’s a natural reaction from the media, but if you were looking at solid profit announcements (which David Jones won’t be able to match), look no further that the downmarket (compared to DJs) operator, The Reject Shop; it had a cracker.
Profit up 20%-plus for the year and a prediction of more growth in 2011, which is not what the likes of Coles, Myer, JB Hi-Fi or many other chains have been able to promise.
Sales were up 14% to just over $470 million, so the chain grew margins and dividend payout was lifted.
Net profit was $23.351 million in 2009-10, which was up 22.9% from 2009.
That was boosted by some tax benefits and the company said without that, earnings would have come in at around $22.8 million, up a still impressive 20% from the $19 million earned in 2009.
Same store sales growth were up 1.0%, (1.1% in the second half), so in that respect the company battled selling conditions as tough as its bigger competitors faced during the year.
In fact same store sales growth was a bit slower than some of the majors, but the expansion in margins was the key, despite opening a record 27 new shops in the year.
Dividend for the year is up to 67c a share from 55c a share in 2009 with the 28c a share final announced yesterday.
"Our overall trading result was sound despite moderate comparable stores sales growth as gross margins improved and we were able to successfully open 27 new stores during the year – a company record," managing director Chris Bryce said in yesterday’s statement.
"Our store opening program included 23 stores in the first half, including five stores in a single day with the strong performance of these new stores confirming our belief that our model remains robust," Mr Bryce said.
"Notwithstanding current economic conditions we remain steadfast in our growth plans."
The company said the opening today of its 200th store — in Broadway, in Sydney — represented the half-way point in groups’ plan to build to 400 stores nationally, more than double its footprint in 2004.
Mr Bryce said 2010-11 would be "another challenging year with the overall economic outlook uncertain.
"We have opened three stores to date in FY2011 and have 12 store openings planned for the first half and 17 new stores for the year.
"Sales for the first six weeks of FY2011 have been pleasing, however given the past 12 months it is difficult to predict consumer behaviour and therefore we maintain a cautious outlook for the year,” he said.
The Reject Shop’s shares rose 20c to close at $16.61 yesterday.
For David Jones yesterday’s better newson sales and the reaffirmation of profit guidance generated a day of rare positive reports for the group which has been under siege since the harassment claims against the former CEO and the company broke several weeks ago.
The shares kicked more than 3% higher to $5.11 (up 16c) in an early reaction to the solid news from the financial year just ended.
They ended up 14c at $5.09 at the close, a rise of 2.8% in a market that finished slightly in the red.
The department store group said 4th quarter sales rose 7.3% on a topline basis and same store sales rose 1.7% (which was the same pace for the financial year as a whole for this vital measure of real retailing sales growth.)
In dollar terms, 4th quarter sales rose from $512.3 million to $549.6 million, which was a rise rival Myer could not match as it reported a fall of 0.9% in same store sales and sluggish top line growth.
New David Jones chief executive Paul Zahra said in yesterday’s statement: ”We are pleased to have reported positive like-for-like sales growth in every quarter of 2009-10. This trend suggests we have traded through the worst of the global financial crisis.
‘‘This is particularly encouraging given the unseasonably warm weather in May 2010 and the cycling of the May 2009 federal government stimulus package.’’
The company said that throughout the fourth quarter "the trading performance by category was pleasing."
"Sales growth was evident in Womens and Mens Fashion, Footwear, Accessories and in the key areas of the Homewares category, particularly components of the Electronics offer.
"From a geographic perspective, all States traded in line with expectations, with strongest growth experienced in NSW and Victoria."
The company also reaffirmed its:"· 2H10 Profit after Tax (PAT) growth guidance of 5% – 10%; · FY10 PAT growth guidance of 8% – 10%; and · FY11 PAT growth guidance of 5% – 10% (noting that to achieve the top end of this guidance the economic recovery will need to be in full swing, something that Access Economics does not predict until 2012)."
That caution for 2011 has seen the retailer base its "internal bud
