David Jones is working on a five year plan to turn around sales as the department store faces a grim Christmas season.
The company predicts a fall in first-half profit as it cuts staff hours and tries to reduce high stock levels.
David Jones is also trying to increase its online sales, which have struggled to make an impression so far.
Chief executive Paul Zahra refused to offer guidance for fiscal 2012 due to ongoing weak consumer sentiment but he foreshadowed weak sales figures for the festive season.
“We plan it to be negative,” Mr Zahra said.
Mr Zahra confirmed expectations that profit would fall by 15 to 20 per cent in the first half of fiscal 2012 and said sales were already down around 10 per cent in August and September this year.
The majority of the company’s first half profit is typically earned in the second quarter due to Christmas and the New Year sales.
His comments come as the company’s management works on a strategic plan for the business through to 2016.
“We’re reviewing everything that we do,” Mr Zahra said.
The company is investing in initiatives to improve its long-term performance such as online trading, new stores and new brands.
David Jones will also update the market on the longer term outlook for its financial services business.
Despite full year profit falling by 1.5 per cent, shares in David Jones rose 2.2 per cent after the company said it was looking to improve its long-term performance.
“We have seen a marginal improvement in trade week on week but we’re still remaining conservative,” Mr Zahra said.
David Jones’ full year profit fell to $168.1 million for the 52 weeks to July 30 compared to $170.8 million in the previous corresponding period.
Mr Zahra said he wanted to make sure inventory was “in line” with the lower sales volumes after being left with $50 million worth of stock at the end of fiscal 2011.
He said there were no plans to cut staff or close stores but staff hours were being reduced in line with reductions in sales.
“We have 36 stores. They’re all in high value locations. They’re all profitable. We’ve got no plans to close any stores,” he said.
CityIndex chief market analyst Peter Esho said some investors might consider buying David Jones shares now after the company hinted at possible divestments, reported a healthy balance sheet and committed to pay dividends.
The dividends implied a yield close to 10 per cent on the current share price, he said.
The company declared a final dividend of 15 cents per share, taking the full year dividend to 28 cents, down from 30 cents a year earlier.
Sales in the year to July 30 fell 4.4 per cent to $1.96 billion.
Sales for the first quarter of the company’s fiscal year, the three months to the end of October, are expected to be in line with the three months to July and down 10 per cent from a year earlier.
David Jones shares gained six cents, or 2.2 per cent, to $2.76, while the broader market gained 0.8 per cent. The stock fell to a two-year low last month.
