David Jones: quarterly like-for-like sales up 2.1%, online sales grew 150%

David Jones Limited: quarterly like-for-like sales up 2.1% and online sales grew 150%

Aggressive discounting cuts into sales growth.

Darryl Daté-Shappard

I started investing after finding a copy of Peter Lynch's "Beating the Street" in the English book section of a library in Japan, where I was living at the time in 1997. Seeing that regular people can find investment ideas just as easily as professionals, I used the philosophy of that book to invest in stocks in Japan, and later in Australia after moving in 2001. I also have experience in property investing, and went on to complete my masters degree in Applied Finance at QUT in Brisbane. I follow the investment style of Peter Lynch, Phillip Fisher and Warren Buffett-- knowing what you invest in, doing your homework to keep up with a stock's story and holding a healthy skepticism of what the stock market calls "value".

Published February 17, 2014 1:36 am AEDT

David Jones Limited (ASX: DJS) announced its second quarter 2014 results covering the period up 25 January, revealing like-for-like sales revenue of $602.2 million, or a 2.1% gain from Q2 2013. The period covers the pre and post-Christmas sales, and gives a glimpse into how retailing is progressing during the year's busiest shopping season.

All its key categories of womenswear, menswear, beauty, shoes & accessories, childrenswear and homeware racked up sales growth increases. During the period its electronics category was changed to a retail brand management agreement. It is overseen by Dick Smith Holdings Ltd (ASX: DSH). If that category was removed from calculations, the like-for-like sales figures would be 3.6% up for the quarter.

The quarter was also a test for its online sales website, which was relaunched in November and the result was a 150% increase in sales. It operated uninterrupted through the holiday season, in contrast to the troubled Myer Holdings Ltd (ASX: MYR) site, which was down on Boxing Day and stayed down for about a week afterwards.

David Jones even added more "online-only" sales promotions to take advantage of its competitor's misfortune.

With these second quarter figures, the first-half results are clearer. 1H total sales came to $1.042 billion, up 3.6% from the previous corresponding period and like-for-like sales were a tighter 1.1% increase.

The company has also made changes in its sales categories by exiting music and DVDs and outdoor furniture, which were cut because of low productivity. It is also rethinking the actual store size that it needs taking into account the trend toward online sales.

Foolish takeaway

The age of sprawling stores is giving up to small space specialty retailing. However, one thing that David Jones, as well as Myer, have on their side is the real estate that its stores currently take up.

Reducing store needs would allow it to free up extra space for specialty retail or other commercial development, creating other income channels, so watch this retail space to see how it can grow further and possibly raise its margins.

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