South African Woolworths Holdings blamed the shut-down of the Dick Smith concessions and the timing of Boxing Day in its financial calendar for a collapse in sales growth at its upmarket department store David Jones in the first half.
In the 26 weeks to December 25, David Jones' sales increased by 4 per cent, compared to an 11.2 per cent spike in sales growth in the previous corresponding period and an 8.4 per cent jump in sales for the full year to June 2016.
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Neil Perry to transform DJ's food halls
Renowned chef Neil Perry is set to transform David Jones' ageing food emporiums into 'world-class food experiences'.
Sales for the Country Road Group, which includes the Trenery, Witchery and Mimco brands, retreated by 0.9 per cent, despite the positive impact of the acquisition of the Politix Brand and its earnings slumped by more than 16 per cent.
Comparable sales inched up by just 0.5 per cent in Australian dollar terms, compared to a 9.7 per cent leap in the previous corresponding half, which analysts speculated was supported by discounting.
Six major Australian apparel brands have collapsed since December and it appears David Jones has also felt the pressure of what it referred to as "difficult trading conditions in both Australia and South Africa".
David Jones' adjusted profit before tax increased by 2.9 per cent to $105 million.
Woolworths chief Ian Moir said the 26-week sales were "a good set of results in challenging trading conditions". "We have continued to grow the top line in a very competitive pricing environment," Mr Moir said.
"With the ongoing transformation of David Jones some encouraging signs from Country Road and the continued success of our food and clothing offer in South Africa, we are confident of maintaining our position as the leading southern hemisphere retailer."
Woolworths described it as a "difficult six months" for Country Road but the group is now being led by new chief Scott Fyfe and it said the second-quarter performance was better than the first.
Group profit before tax was 37.9 per cent higher in the half at $464 million, bolstered by the sale of David Jones Market Street store, a transaction that reaped the operation a $172 million profit. Profit after tax was 36.6 per cent stronger at $332.5 million.
Group sales increased by 6.7 per cent to $3.79 billion.
Mr Moir warned shareholders in late 2016 to expect "substantial losses" as it invests as much as $100 million in rolling-out the David Jones food business, spear-headed by celebrity chef Neil Perry.
We have continued to grow the top line in a very competitive pricing environment.
Woolworths chief Ian Moir
Woolworths Holdings paid $2.1 billion to buy the David Jones department store chain in 2014 but the apparel retail market in Australia has been king hit by the arrival of global operators such as Zara, Uniqlo and H&M.;
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