(Updates with closing share price in fifth paragraph.)
Sept. 21 (Bloomberg) -- David Jones Ltd., Australia’s second-biggest department store chain, affirmed its forecast for lower profit after second-half earnings dropped 11 percent amid a continuing slide in sales.
Net income will fall as much as 20 percent in the first half ending January, Sydney-based David Jones said in a statement today. The chain reported earnings dropped to A$62.4 million ($64 million) in the six months ended July after sales dropped 9.2 percent.
David Jones said sales in the first quarter of the current year will fall about 10 percent, with the pace of decline to ease on Christmas demand and the impact of clearance sales early in the new year. Households have curbed spending on discretionary items such as clothing and furniture amid a slide in consumer confidence in five of the past six months and concerns about the global economy, home prices and employment.
“Trading conditions remain difficult,” Chief Executive Officer Paul Zahra said in the statement. David Jones is “well positioned to trade through the current challenging environment,” he said.
David Jones shares rose 2.2 percent to A$2.76 at the 4:10 p.m. close in Sydney, paring this year’s decline to 38 percent.
Earnings before interest and tax from its department stores fell 14 percent to A$67.9 million in the second half and profit margins dropped as sales fell.
Zahra is trying to turn around the sales decline with store refurbishments, an upgraded website and new brands exclusive to its stores.
Management will release a strategic plan next year for the four years ending 2016, the company said.
Earnings from financial services, which includes its store credit card, rose 7.5 percent to A$24.9 million.
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