David Jones has reported a record high first half profit after tax of $100.5 million for the six months ended 23 January 2010 (1H10). This represents an increase of 10.2 per cent on 1H09 ($91.2 million).
The company’s department store business reported a 9.8 per cent increase in earnings before interest and tax (EBIT) from $114.4 million in 1H09 to $125.6 million in 1H10.
The company’s EBIT to sales ratio for 1H10 increased by 90 basis points (bp) to 13.5 per cent. Gross profit margin for the first half of FY10 was 40 per cent, up from 39.5 per cent in 1H09. This represents a 50bp improvement and is an excellent result given the heavy promotional activity and discounting by retailers throughout 2Q10.
The GP margin reflects the work undertaken by management throughout 2007 in renegotiating its 2,700 supplier contracts, the reallocation of space to high margin categories and the increase in department store exclusive brands.
The company’s key new store at Bourke Street and refurbishment projects for FY11 are all on track. The Bourke Street store is on track to be completed in the first quarter of FY11, Kotara is expected to be completed in November 2010 and Claremont is due to open in March 2011.
“Despite a very competitive environment in 1H10, with heavy promotional activity by retailers, we are pleased to report that our GP Margin hit an all-time high of 40% and our EBIT Margin was 13.5 per cent, up 90 bp when compared to 1H09,” said David Jones CEO Mark McInnes.
“Our company has continued its stringent management of costs, making good progress in implementing the 58 cost efficiency initiatives we announced in September 2009 including putting the company’s advertising agency, energy, lift and escalator maintenance, media buying and catalogue printing and delivery contracts out to tender.
“We have net debt of less than $100 million and all of our existing assets are of the highest quality and are supported by strong cashflows reflecting the strong focus the company has placed since 2003 on return on capital,” said McInnes.