David Jones Ltd., Australia’s second-largest department store company, fell to the lowest in more than three months after warm winter weather and competition helped drive quarterly sales to an eight-year low.
The stock fell 0.8 percent to A$2.56 at the close in Sydney, the lowest since Feb. 6, after earlier declining as much as 5.4 percent. Sales in the three months ended April 27 dropped 2.2 percent from a year earlier to A$391 million ($377 million), David Jones said in a statement today, the lowest since the same quarter of the Sydney-based company’s 2005 financial year.
Weak consumer sentiment has depressed sales at Australian retailers and the currency’s strength has stoked online shopping from overseas stores, leading competitors to reduce prices. Third-quarter sales from David Jones stores open at least 12 months dropped 3.4 percent, compared with a 1 percent drop expected, based on the median of five analyst estimates compiled by Bloomberg News.
While the ongoing depth and breadth of price cuts in the industry isn’t sustainable, “in the short term, we expect to see heavy discounting as other retailers attempt to address excess winter inventory,” Chief Executive Officer Paul Zahra said in the statement.
Myer Holdings Ltd., the country’s largest department store company, said last week that quarterly sales from stores open at least 12 months were up 0.4 percent. Wesfarmers Ltd. dropped the most in two years on May 17 after forecasting that earnings at its Target unit, the country’s largest department store chain, would fall as much as 43 percent this fiscal year.