Department store owner David Jones yesterday maintained earning guidance after reporting meeting its oft-stated guidance for a profit rise of around 5% for the six months to January 29.
The company reconfirmed that guidance, when reporting its second quarter and first half sales figures a few weeks ago and yesterday, produced a 5.2% increase in net profit to $105.7 million.
The shares rose 10c, or 2.2%, to $4.60 after the profit report was released to the ASX.
Revenue fell 0.2% to $1.08 billion.
David Jones declared an interim dividend of 13c a share, up from 12c in the previous corresponding half.
The company said the proposed interim was an "all-time high" first-half dividend.
The company did a lot better than department store rival Myer which reported 3.5% fall in revenue to $1.73 billion, and a 5.2% fall in net profit to $108.8 million for the first half.
So David Jones’ net profit was around $3 million under that of Myer, despite having $700 million less in sales in the six months.
That of course includes the strong contribution from financial services (up 7.5% to $22.8 million in the latest half on an earnings before interest and tax basis).
Department store earnings before tax and interest rose 4.2% to $130.9 million. Myer’s EBIT was $168.2 million from its business, which is mostly department store based.
But that fell 6.8% in the half from the same half of the 2010 financial year, so David Jones’ performance was much better.
Myer shares dipped 5c or 1.5% to $3.24 yesterday.
The continuing solid contribution from financial services is a big plus at David Jones.
David Jones chief executive Paul Zahra said in the statement that full year earnings for this financial and the 20102 year were expected to come in line with previously issued guidance "subject to no further deterioration in consumer sentiment and no further adverse changes in the macro economic environment".
"We reaffirm our five per cent to 10 per cent PAT (profit after tax) growth guidance for 2H11 and FY12, noting however that if consumer shopping behaviour continues as per 2Q11 we expect our PAT growth will be at the lower end of our guidance," Mr Zahra said in the statement.
David Jones said a further update on trading conditions would be provided at the retailer’s third quarter sales results due in May.
"The recent trading environment has been negatively influenced by adverse weather and significant events such as the floods in Queensland and Victoria, the earthquake and tsunami in Japan and the unrest in Libya," David Jones said.
"All of these have resulted in volatile markets and a deterioration in consumer sentiment."
David Jones said its gross profit margin for the first half of fiscal 2011 came in at 39.7%, which was within the company’s target range of between 39.5% and 40%.
However, it was down 30 basis points from the prior corresponding period, which David Jones said reflected the "heavy promotional activity and discounting by retailers throughout the second quarter.
"The company was able to maintain its GP margin within its target range through continued reallocation of space to high margin categories and the increase in department store exclusive brands, which protects the company’s competitive positioning," David Jones said.
