David Jones says a lower Australian dollar has helped it to pinch customers back from international online rivals.
Earnings from the company’s department store business grew by more than eight per cent to $91.6 million in the six months to January 25, thanks to a 3.8 per cent rise in sales.
But its net profit dropped by 4.6 per cent to just over $70 million, due to reduced earnings from its financial services division.
Chief executive Paul Zahra said a fall in the Australian dollar from around $1.04 a year ago to its current level of around 91 US cents had turned customers away from international websites.
“We’ve seen that as the $A has fallen below parity with the $US, shopping on an offshore website has become less interesting for our customers,” he said.
“So we have seen a lot of customers return to shopping with us and of course now we’ve got our own online business that allows us to compete head to head.”
David Jones relaunched its online store in 2013 and expects online sales to account for 10 per cent of total sales within four years.
Mr Zahra said a strong rise in Australian property prices during the past year also meant customers felt they had more to spend.
“Our core customer is feeling wealthier, not only in the price of their home but in the equity market as well,” he said.
The company said its financial services division was hit by customers using their David Jones Store Cards less, though this was partly offset by increased demand for David Jones American Express cards.
The transfer of control of David Jones’ electronics division to retail business Dick Smith had removed what had been a drag on earnings, Mr Zahra said.
Despite improving sales the company wants to reduce costs, and will close under-performing stores including Birkenhead Point in Sydney and Harbour Town on the Gold Coast once their current leases expired.
David Jones also said it had received positive feedback from Sydney City Council in relation to a proposal to develop the space above its flagship Market Street store.