Department Chains Feel Burn of New Entrants

Both David Jones are Myer are feeling the sting from the retail crunch, as the competition increases with digital players and the dip in consumer spending remains.

Yesterday, South Africa’s Woolworths Holdings announced its profits would be hurt by the write-down of its Australian business David Jones, after the department chain reported a further slump in sales.

In its second-quarter update till 31st December the retailer revealed a 3.3 percent drop in sales on a comparable basis and 3.8 percent lower in total.

Meanwhile, Woolworths Holdings-owned Country Road Group saw a 5.2 percent increase in sales. Woolworths will now look to reassess David Jones’ asset value. In the last quarter results, Woolworths Holdings reported a reduction in net retail space – 2.2 percent in DJs and 3.8 percent in Country Road.

Last month Myer reported total sales in November were down 2.3 percent and down 1.8 percent on a comparable store sales basis and it had depressed December figures despite its heavy investment in marketing and traffic-driving initiatives.

This was in line with analysts’ Christmas retail predictions that online retail will be the biggest winners this holiday shopping season with Myer CEO Richard Umbers confirming that its online business performed well during that period.

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