David Jones is stepping back from its heavy discounting strategy to rely instead on its traditional clearance sales to reignite shopper interest.
Chief executive Paul Zahra said given the poor performance of David Jones’ 2011 end of financial year clearance in June, they had decided not to hold any sales in the lead-up period.
“What we’ve intentionally done, strategically, is to make sure that the sales events that we have are credible,” he said.
David Jones sales strategy is contrast to that of its rival Myer, which has held regular sales events this year amid the gloom gripping the retail sector.
While sales have continued to drop at David Jones, Mr Zahra said the rate of decline had stabilise and the department store was on track to clear its backlog of inventory by the end of the financial year.
Consumer confidence was still quite low, he said, but shoppers were not reacting dramatically to overseas financial news.
“What you’re seeing is that consumers aren’t reacting to the international shocks,” Mr Zahra said.
“Maybe it’s because they have 12 months to get their head around it.”
His comments came as David Jones unveiled its latest sales results for the three months to April 28.
Total sales fell 2.9 per cent to $399.8 million, compared with the previous corresponding period.
Like-for-like sales, which take account of store openings and closures, were down 3.1 per cent.
City Index analyst Peter Esho said David Jones’ focus on its clearance sales, was an effort to distinguish itself from Myer.
“I think what they’re trying to do is move away from the route that Myer has gone down – heavy discounting, sacrificing quality for price,” he said.
“I think David Jones doesn’t want to be put into the same basket as Myer. It’s not good for their brand.”
Mr Esho said if David Jones could clear its inventory, it would be a turning point for the retailer.
“As a retailer the worse thing that can happen is that you have too much stock piling up as that ties up all of your cash and it really limits what you can do,” he said.
David Jones still expects its profit after tax in the year to the end of July to be down by 35 per cent to 40 per cent on the previous year.
Home and electrical product categories continued to be challenging in the third quarter, while the best performers were womenswear, accessories, beauty and menswear.
The strongest sales were in Western Australia and Queensland.
David Jones’ sales fall was larger than Myer’s, which last week reported a 2.1 per cent drop in third quarter like-for-like sales.
Myer has forecast a drop of up to 15 per cent in its full year profit.
Shares in David Jones closed down four cents at $2.21.
