Thursday 21 July 2011

David Jones Debacle

The much publicised David Jones profit down grade has impacted significantly on retail media and the share market and, according to some, has significance for all retailers.
David Jones CEO Paul Zahra said it was the retailer's largest known quarterly fall in sales and could lead to a 15-20% downturn in profit for the second half of the 2011 fiscal year.  The largest fall was reportedly amongst the higher income group, normally DJ’s bread and butter. Zahra said that the company would need to address excess inventory levels and factor in lower consumer confidence brought about by interest rates and the carbon tax but admitted they were heading into uncertain territory.
However, Melbourne Business School academic Jody Evans says the profit warning is another sign consumer behaviour has "fundamentally and permanently changed since the financial crisis". "Many retailers felt that the mid-year stocktake sale would be the big fix," she said. "We said at the time of the GFC that it was dangerous to assume that customers will buy more if you drop the prices."

Inside Retailing - 14/07/11