David Jones Profit Outlook Clouded By Pandemic Uncertainty
The CEO of Woolworths Holdings, the South African owner of department store David Jones, has warned the uncertainty of the pandemic is clouding the company’s profitability outlook.
Roy Bagattini said the store has “come through a painful process” to improve profitability but is still waiting for David Jones to justify its $2.2 billion price tag when it was taken over by Woolworths in 2014.
This is despite the department store chain’s first half earnings recovery, which saw it bounce back into the black with $56 million – up 33 per cent.
“Frankly even through COVID, work is being done shoring up the financial health of the business, it has been very important, and we focused primarily initially on our balance sheet, we had these very high levels of debt which were not sustainable … and we had to take some really tough decision for a couple of our key assets,” Bagattini told The Australian.
“And we do see on a go-forward basis an important return to profitability for David Jones.”
David Jones accepted $35 million in JobKeeper from the government and received rent relief from some landlords. It has no plans to pay back the JobKeeper subsidy.
Sales for the December half declined by 8.8 per cent while online sales soared by 55.5 per cent.
Woolworths has been shuttering stores – most recently several in New Zealand – in a bid to cut costs and bring David Jones back into the black.