CANBERRA: Upmarket department store chain David Jones has posted its strongest sales growth in eight years under new South African owner, Woolworths Holdings, increasing the pressure on arch rival Myer.
In a trading update in Johannesburg on Wednesday, Woolworths said David Jones’s sales for the year ending June 30 rose 6.4 per cent in Australian dollar terms, underpinned by same-store sales growth of 3.7 per cent and space growth of 1.3 per cent.
Under new chief executive Iain Nairn, the former CEO of Country Road Group, David Jones has also been using focus groups and data analytics to better understand customer shopping habits, inside and outside David Jones stores.
This represents the strongest rate of growth since 2007, when top-line sales rose 8.9 per cent, and suggests that sales in the June-half surged more than 10 per cent, after rising 2 per cent in the first-half.
David Jones has posted its strongest sales growth in eight years under new chief executive Iain Nairn and Woolworths Holdings chief executive Ian Moir.
David Jones has posted its strongest sales growth in eight years under new chief executive Iain Nairn and Woolworths Holdings chief executive Ian Moir. Photo: Louise Kennerley
In comparison, sales at Myer rose 2.4 per cent in the three months ending April, taking sales growth for the year to date to 1.7 per cent.
Analysts believe David Jones has boosted sales by replacing underperforming brands with faster-growing brands such as Country Road, Mimco, Witchery and Trenery, which are now wholly owned by Woolworths SA.
Country Road’s sales in Australia and New Zealand rose 11.5 per cent, with comparable store sales up 4.7 per cent.
Under new chief executive Iain Nairn, the former CEO of Country Road Group, David Jones has also been using focus groups and data analytics to better understand customer shopping habits, inside and outside David Jones stores.
At a Retail Council forum last month, Mr Nairn revealed that David Jones had created a 16 box grid, including four levels of fashion and four levels of pricing, to identify growth opportunities in the $21 billion apparel sector and to attract customers who are not currently shopping at the retailer.
Mr Nairn is also introducing new customer relationship management and merchandising systems, tweaking David Jones’s customer loyalty and credit card programs, and improving customer service by incentivising staff to spend more time on selling and less time on administrative tasks.
It is understood that sales have risen strongly across the board in the latest half, including apparel, cosmetics, accessories, homewares and online.
Mr Nairn’s strategies have increased pressure on Myer’s new management team, which is putting the finishing touches on a new business model and strategic plan.
David Jones has also been discounting heavily to clear last season’s stock ahead of the introduction next month of a suite of Woolworths private label brands. However, analysts said the discounting did not appear to have dented margins.
Woolworths is now planning to overhaul David Jones’s food business and recently appointed one of its senior food executives, Pieter de Wet, as general manager of foods.
The strong performance from David Jones helped boost Woolworths’ total sales for the year by 54.9 per cent. Excluding David Jones, group sales grew 12 per cent, with food growing faster than apparel.
Woolworths outlaid $2.1 billion for David Jones and paid $213 million to buy out Solomon Lew and other minority investors in Country Road last August. The acquisitions made Woolworths the second largest apparel retailer in the southern hemisphere. Woolworths is due to report full-year profits on August 27.
