David Jones prepared to pay for Myer stores

Australian department store David Jones is prepared to "pay a premium" for the suite of Myer stores that it wants to acquire from retail giant Coles Myer, and is open to a private equity partnership.

Chief executive Mark McInnes today expressed his confidence that David Jones would be able to create more value from the Myer stores under consideration than other potential purchasers.

"I think we'd bring our business model to those stores, we'd also bring our credit card operations to those stores and as a result of that those stores are more than likely to be more valuable in our hands than anybody else's," he said.

"I guess as a result of that we'd be prepared to pay a premium and if that was acceptable to a private equity partner there may be a deal that can be cut."

Mr McInnes said David Jones was "not necessarily" looking at Myer's capital city stores or its major stores at Bondi and Chatswood in Sydney, or Chadstone in Melbourne.

"Some of those stores that Myer have today are centres that we're most likely to enter into anyway in the next five years," he told Channel Nine's Business Sunday program.

"Places like Indoorapilly, Chermside (both in Queensland) and Doncaster (Victoria)."

Mr McInnes said David Jones would complete reviewing the planned expansion of its financial services beyond store cards by the end of this year.

"We will look at talking to the market about that next year for implementation post-08," he said.

Mr McInnes said the cost of establishing a broader range financial services would not be great.

"We've largely got the core competencies in our business today," he said.

David Jones last month announced a 19 per cent jump in annual net profit to A$77.86 million ($86.63m) for 2004/05, in line with its own forecast and market expectations.

In contrast, Myer reported an A$15 million net loss in the second half of 2004/05, a result that prompted owner Coles Myer to put the business up for sale.

A long line of retailers were hit by slowing consumer spending last financial year, amid rocketing petrol prices and an unseasonably warm winter.

David Jones shares last traded at A$2.55.

- AAP