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High street retailer is down

DJs Q3 sales fell 2.2% to $391.1 million, compared to same time 2012, as it cuts out the bargains.

Like-for-like sales for the period 27 January-27 April were also down 3.4% to $386.2 million as David Jones confirmed it reduced discounting throughout the quarter. 

The store reported poor performance in Electronics and Home categories affected by “price pressures”, while Beauty, Menswear and Childrenswear were key drivers of growth. 
David Jones CEO Paul Zahra blamed “the unseasonably warm start to winter” which he said impacted Womenswear in particular. 
“In the current environment of cautious consumer sentiment we made a deliberate decision to continue to focus on the areas of our business that we can control namely; GP Margins, Inventory and Costs. “
“Our high margin Beauty, Menswear and Childrenswear categories delivered growth for the quarter, however our overall sales performance was once again adversely impacted by our Home categories, in particular Electronics which continues to be subject to industry and price pressures.”  
DJs continued to cut discounting throughout 3Q, removing its $10 million ‘Floor Stock Clearance’, notwithstanding aggressive promotional activity in the market.

Last week, rival Myer announced one of the biggest stocktaking sales ever, as it announced a slight lift in sales. 
“Our view is that the ongoing increase in the depth and breadth of discounting that we are seeing in the market is not sustainable,” Zahra said, which he claims “is a view shared by many brands.”

“We have seen an increase in the number of brands looking to convert their distribution arrangements to department store exclusive agreements with David Jones.”

The retailer looks set to launch a partnership with China card UnionPay, according to reportsallowing Chinese visitors pay for goods at the store renowned for luxury items, a move which DJ’s may be hoping will lift sales. 

DJ Shares fell 3.88% to $2.48 following the announcement. 

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