This article is from the Australian Property Journal archive
RETAIL landlords are being faced with more tenancy headaches as Woolworths Holdings looks to slash the footprint of its David Jones stores by 20%.
Difficult retail trading conditions due to a slump in consumer spending squashed the department store’s annual profit by 42%. Operating profit was $37 million, while EBITDA tumbled 18.9%.
Gross profit margin for the year June 30 was down 1.1% due to higher markdowns and a greater focus on clearance. Works at the Elizabeth St flagship store took a 3% chunk out of second-half sales.
Comparable sales were down 0.1% and overall revenue fell 0.8% to $2.2 billion.
Woolworths Holdings has recently written off more than half the value of David Jones since acquiring the chain for more than $2.1 billion in 2014. Earlier this month, it wiped $437.4 million from the value David Jones, taking its value down to $965 million.
“Space reduction to improve the productivity of the existing store portfolio is a priority,” the South African parent company’s chief executive, Ian Moir said.
Woolworth Holdings intends to reduce David Jones floor space by 20% by 2026 via negotiations with landlords – ahead of expiry in some cases.
Some David Jones stores will also be slimmed down.
Woolworths Holdings’ Country Road Group, which takes in clothing retailer Country Road, Mimco, Trenery, Witchery and Politix, saw operating profit dip 2.9% to $100 million. Comparable sales were up slightly, by 0.6%.
Both David Jones and Country Road posted healthy online sales growth, making up 20% of total sales for the latter.
