Retailing: David Jones To Update Market, Release Interim Profit Tomorrow. —
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Retailing: David Jones To Update Market, Release Interim Profit Tomorrow.

March 20th 2012 - Australasian Investment Review – (AIR)

Shares in department store group David Jones are in a trading halt while the company hammers out the final make up of a new strategy to try and reinvigorate the group after the trading slump seen in 2011.

The halt was requested yesterday after some broad details about the strategy leaked to the Australian Financial Review yesterday which were buried inside the paper (on page 17) instead of being on page one.

The company yesterday said the trading halt was being requested pending a vote by its board on a new “strategic plan” for the department store operator.

The company’s shares ended at $2.73 on Friday.

They are up 15% in 2012; almost triple the near 6% rise increase for the ASX200 share index. That’s despite expectations of a sharp fall in first half profit after a sales slump.

David Jones reported last month that it was still on track for a fall of 15% to 20% in net profit after tax for the first half of 2011-12.

David Jones said second quarter sales fell 3.1% to $598.5 million for the second quarter of the 2012 financial year ending January 28. Like for like sales fell 2.4%.

For the half, sales fell 6.6% on a topline basis to $US1.013 billion. Like for Like sales fell a nasty 6.1%.

In yesterday’s statement to the ASX, David Jones directors said it sought the trading halt for a maximum of two days ”pending a board meeting tomorrow to consider the company’s strategic plan”.

The Australian Financial Review yesterday reported that David Jones is likely to confirm speculation of a 50% drop in future credit card earnings ahead of the expiration next year of part of its 10-year agreement with American Express.

That loss would cut annual profits by $27 million or more from 2013.

“While the Company does not believe that there has been any leak of confidential information by the Company and that the speculation is based on publicly available information, the Company considers a trading halt to be appropriate in the circumstances,” David Jones said its statement.

David Jones is scheduled to release its half-year results and strategic plan on Wednesday.

Rival department store group Myer last Thursday revealed a near 20% fall in interim earnings and trimmed its sales outlook to a flat or slightly negative second half.

Market analysts expect the update tomorrow on the strategy to reveal a new expansion plan with a reduction in the number of new stores planned, plus the outline of how David Jones is going to tackle the competition from the internet.

Higher investment in staff, technology, prices and store refits are also expected.

This Information is provided to you by the Australasian Investment Review (AIR). Subscriptions are free.AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decision.


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