These doofuses blame it on the lack of online shopping! No. No! -- Anything but collapse! -- MCR
Big retailers hammered
22 March, 2012
THE slump in Australian retailing has worsened, with two more of the nation's leading chains unveiling wretched earnings figures that have been blamed in part on the industry's failure to embrace online shopping.
Days after Myer disclosed a 20 per cent profit dive, rival department store giant David Jones has announced its own 20 per cent profit reversal for the latest half-year and shocked the sharemarket by forecasting a 40 per cent full-year slump.
''It's certainly been the toughest retail conditions I've seen in my career,'' said David Jones chief executive Paul Zahra. The announcement prompted an 11 per cent dive in DJs' share price.
Outdoor clothing retail chain Kathmandu has also fallen on tough times, announcing a 43 per cent collapse in its earnings for the latest half-year.
The stream of poor results coming out of the retail sector has further underlined the worryingly uneven performance of the Australian economy, which has continued to produce respectable headline growth figures thanks to the boom conditions in the mining sector.
Apart from the broader problems in the economy - which have hit consumer spending - analysts have pointed the finger at Myer and David Jones for being too slow to embrace the online shopping boom that has been sweeping the world - and that has been cutting into their revenue and margins.
As he predicted that David Jones' full-year profit would drop by as much as 40 per cent, Mr Zahra admitted yesterday the company had been too slow to move online and was now playing catch-up.
In 2003, then David Jones chief executive Mark McInnes closed the store's online business. It was relaunched in 2009, but the online offering is still meagre compared to overseas counterparts. ''I think it's fair to say in the last decade we have not invested enough in technology,'' Mr Zahra said. ''I think we've lost a little bit of relevance over the last couple of years.''
He made the comments while unveiling the company's new online strategy, which includes increasing its online offering from 9000 products to 90,000 by Christmas, a mobile web store application and a social commerce site.
Commonwealth Bank retail analyst Andrew McLennan said Myer and David Jones were between three and five years behind many of their international counterparts when it came to selling online. ''There is no question that those department stores doing well internationally are the ones with the best online presence,'' he said.
Deakin University retail industry fellow Steve Ogden-Barnes said the race to make up lost ground could be protracted for the big stores. ''Unfortunately these retailers have viewed online as the enemy for far too long and as a result they have missed opportunities and sales.''
David Jones also said yesterday it was now forcing famous brands such as Yves Saint Laurent and Lancome to cut prices so it could compete more effectively with online competitors. The company said it had passed on price cuts of up to 29 per cent from some international brands in recent months as it tried to cut the gap between local prices and the cheaper deals offshore