Australian upmarket department store chain David Jones plans to cut costs and open new stores to ensure profit after tax growth of at least 5-10 per cent a year, amid concerns about a pullback in retail spending.
In a statement yesterday, outlining a strategic plan for the 2009-2012fiscal years, the retailer said it would achieve the profit growth regardless of fluctuations in the economic cycle.
"The economic cycle is a reality in our business. Our fundamental premise is that we can deliver profit after tax and dividend growth through the cycle," chief executive Mark McInnes said.
The retailer said that during the last pronounced slowdown in consumer spending in 2005, it posted profit growth of 19 per cent.
McInnes said the company had factored in economic forecasts of a trough in retail spending in mid-2009 and a recovery in 2011.
As a result, total sales growth at David Jones in fiscal 2009 and 2010 is expected to slow to 1-3 per cent, with like-for-like sales at 0-1 per cent.
"As has been the case in previous downturns, we will experience two to three consecutive quarters of flat to negative like-for-like growth," McInnes said.
David Jones, which competes with larger chain Myer, owned by private equity firm TPG, has seen its shares slide 29 per cent this year on worries that sharemarket turmoil and rising interest rates will curb spending by even its affluent shoppers.
The broader market is down 14 per cent.
The retailer, which has 36 stores, said it planned to open four to eight new stores in high-growth areas which should generate more than A$40 million ($46.3 million) of sales each.
It also planned to refurbish existing stores to expand sales of high-margin goods.
David Jones also expected earnings growth from its new credit card business of at least 7.5 per cent a year.
