CEO predicts tough year for Australia

David Jones chief executive Mark McInnes says the next 12 months for the retail sector will be difficult, but consumer confidence appears to be returning.

The up-market department store chain last month sharply upgraded its expectations for fiscal 2009 second-half earnings and annual earnings.

McInnes said yesterday that sales had picked up in May and June on the back of Government fiscal stimulus payouts and more normal trading in the equities market.

"Once those two things happened, in combination by the way, it was kind of this sense of relief and a sigh across the market of 'wow, maybe that is as bad as it [the recession] gets and people started spending again'," McInnes told Sky News' Sunday Business show.

But he said it was too early to make the call with certainty given that events elsewhere in the world could still affect Australia.

"So we still think we're in for a difficult next 12 months, but consumer confidence is certainly higher now than it was at the same time last year."

McInnes said David Jones' profit growth had come from sales being at last year's level, not higher sales.

He said lower interest rates were "a future opportunity" for retail growth. They would stimulate the housing market, which would generate the next retail boom. Homewares, electrical products and computers retailer Harvey Norman told Sky News that sales in May and June were "quite good". Chairman Gerry Harvey said that in June sales of notebook computers had risen 35 per cent and plasma and LCD televisions were up 26 per cent.

- AAP