Department store group, David Jones issued a shock profit downgrade last night, blaming a dramatic deterioration in trading conditions.
The retailer warned that net profit for the current financial year, ending July 30, would be half a per cent to 2% lower than a year ago or between $167.7 million and $169.7 million lower.
That followed a sharp fall in sales in the final months of the July 30 half year, with the consequent impact on profit.
The sales and profit warning was extended to the first half of the 2011-12 financial year as well.
David Jones is the second retailer to warn on profits after the much smaller Noni-B women’s wear chain said earlier this week that sales were flat for the June 30 year, but profit had slumped from $3.9 million the previous year to around $600,000 in 2011.
DJ’s chief executive Paul Zahra said in a statement released after the market closed. "The dramatic and rapid deterioration in trading conditions in the fourth quarter has been unprecedented."
The group also warned on its performance for the next 2012 financial year, saying it expected a sharp fall in first half profit instead of a small rise.
The company’s downgrade came after it had said at the release of third quarter sales on May 11 that provided there was no further deterioration in trading conditions and April’s trading conditions continued throughout 4Q11, “it expected 2H11 PAT growth to be approximately +5%.”
“Trading conditions deteriorated significantly through the all-important Clearance period in June and Clearance Clearout in early July.
“Based on trading to date, the Company now forecasts Total Sales for 4Q11 (13 weeks vs. 13 weeks) to be approximately -11% and 2H11 PAT to be between $62 million and $64 million, a decline of 9% to 12% on 2H10.
“This will result in the full financial year 2011 (FY11) PAT declining by 0.5% to 2.0% versus last year (equating to between $167.7 million to $169.7 million).”
David Jones CEO Paul Zahra said in the statement last night that "The dramatic and rapid deterioration in trading conditions in
4Q11 has been unprecedented.
“As a result we are taking a cautious approach to 1H12 and have
planned and forecast trading conditions to continue to be challenging, with expected negative sales and action to manage inventory levels resulting in our forecast 1H12 PAT declining by approximately 15% to 20% compared to 1H11, equating to 1H12 PAT forecast of $84.5 million to $90 million.
Shares in agricultural chemicals supplier Nufarm Ltd ended up 1.8% after the company updated the market on trading conditions and earnings yesterday.
The company said in a statement to the ASX that it looks like reporting an underlying operating profit of $67 million to $73 million for the year to July.
The shares rose 8c to $4.46 by the close yesterday after hitting a day’s high of $4.57.
The company said its underlying net operating earnings for the 12 months to July 31, 2011 will fall within a range of $88 million to $94 million.
"This estimate excludes the impact of material items and of the receivable-related write-down disclosed on June 15," the company said in the statement.
"That write-down will reduce the estimated underlying net operating profit by $21 million."
That relates to a contested customer receiveable.
Nufarm said trading conditions across its various regional operations have varied from "positive to difficult" over the past few months.
The positive part of the update was in Australia, the negative was in the US.
Nufarm cautioned in the statement:
"July is forecast to be an important earnings month for the business, reflecting the high level of sales activity that often takes place in this period.
"Forecast earnings for July, and hence the full year, assume trading conditions will support this level of sales activity."
Nufarm will report its results in late September.
Rio Tinto offshoot Energy Resources of Australia (ERA) has lifted its full year uranium oxide production forecast by 8.3% as it gets its Northern Territory processing operations ramped up after a closure because of a very wet rainy season up north.
The closure and flooding at the company’s NT uranium mine near Darwin has already seen the estimate for 2011 uranium ore and uranium oxide production slashed, with the subsequent impact on sales revenue and earnings.
Now that the ground and mine is drying out, ERA now expects to produce more uranium oxide in 2011, compared with the previously stated estimate.
"With the progressive restart of the processing operations from 14 June 2011, ERA’s 2011 production of uranium oxide is now expected to be approximately 2,600 tonnes.
"This has increased from the previously announced 2011 production expectation of approximately 2,400 tonnes," ERA said in yesterday’s second quarter and half year production and exploration report.
Not much, but enough to convince the market that all is not lost for ERA.
The shares rose 3.2% or 13c to $4.19 yesterday.
The wet weather and its aftermath saw ERA’s uranium oxide production in the second quarter slump 90% from a year earlier.
The wet caused a suspension of the Ranger mine on January 28.
ERA produced 83 tonnes of uranium oxide during the three months to June.
On June 14, the company said it would progressively restart processing operations at Ranger.
For the six months to June, ERA
