Christmas wish for David Jones
Luring customers to the shops remains a challenge for retailers. Photo: Glenn Hunt
DAVID Jones is expecting sales will remain flat over the important Christmas season, with departing chairman Bob Savage telling shareholders on Friday that consumer sentiment remains subdued despite recent interest rate cuts.
David Jones chief executive Paul Zahra said after the shareholders' meeting that deflation of 2 per cent had prompted the company to plan for a flat result.
''We have to work hard to stay still is probably the best way to describe it,'' he said.
Mr Zahra said that, as with this time last year, consumer sentiment remained the biggest drag on the company's performance. ''It is something that I have no control over and it's the biggest challenge.''
His departing chairman concurred.
''The management team can go off and execute everything in the strategy brilliantly and if consumer sentiment doesn't change, the results will be good but not exceptional,'' Mr Savage said.
''So the reward for their effort is going to be heavily dependent on what's happening in the economy.''
Some shareholders also raised the disappointing service in the company's stores as another reason for the department store's weak performance.
''I suggest your profitability is down due to a total and utter lack of customer service in your shops,'' one shareholder told the meeting.
Many more expressed the same sentiment.
Mr Savage defended staffing levels, which were increased as a proportion of sales last year after the company admitted it had cut too heavily in this area.
He promised there would be further improvements to service when new point-of-sale systems were installed in its stores. These systems are expected to cut transaction times in half.
The company has only just begun the rollout of the new system and plans to complete the installation by July.
Price deflation is potentially another big issue for the company - but only if it can convince its suppliers to lower prices to levels that are competitive with what rivals charge for the same product internationally.
''The issue of price harmonisation will take some time to work its way through all the products in the store,'' Mr Savage said before admitting that only a small percentage of items in its stores had been harmonised.
Investors were told that some suppliers were experimenting with price cuts at the moment to gauge their effects on sales while others were continuing to milk higher margins from shoppers.
David Jones announced on Thursday that Mr Savage would step down at the end of this year, to be replaced by fellow board member Peter Mason.
''While it is always difficult for a chairman to choose an ideal time to retire, I believe the company is in an excellent position to deliver on its strategy, with a stable management team and experienced directors to provide the company with valuable oversight and direction,'' Mr Savage said.