David Jones is likely to smash through a record $1 billion sales barrier with its latest half-year figures, after well-heeled shoppers flocked to its department stores over Christmas.
The high-end retailer has issued a hefty upgrade to sales and profit forecasts for the first half of the financial year ? much to the delight of investors.
David Jones' shares surged almost 7 per cent to a record close of $4.35 on news interim profit would range between $68 million and $71 million ? up to 30 per cent higher than the same period last year.
It was the stock's biggest single-day rise in almost a year. Two months ago, David Jones chief executive Mark McInnes told investors to expect interim sales to rise between 2 per cent and 4 per cent during the trading half ending January.
Yesterday, he revealed that stronger-than-expected trading over the past two months would lift sales growth for the period closer to 8 per cent.
The rise suggests that sales revenue for the first six months of this financial year could reach $1.03 billion.
Mr McInnes said strong trading in all stores and across all departments was a result of buoyant economic conditions leading up to Christmas, because of stable to rising house prices, record low unemployment and reasonable consumer confidence.
"In good consumer spending times, people trade up to aspirational department stores as ourselves," Mr McInnes said, adding that it was still too soon to establish whether David Jones was taking market share from rival Myer, other department stores or specialty retailers.
He said traditional gift-giving categories, such as cosmetics and gift vouchers, had performed well over Christmas, while the Apple iPod was again a big seller.
David Jones still has two weeks of trading data to collect. Official sales will be released next month, followed by its audited profit figures in March.
The retailer is in a strong position to beat its full-year forecast of $88 million to $92 million. But Mr McInnes stopped short of upgrading the company's full-year guidance, saying he would rather trade through the second half of the year before updating the existing forecasts.
Sales would have to fall dramatically between now and July for David Jones, Australia's second-largest department store, to miss its profit targets. Most economists believe the environment for retail spending is improving.
"The strength of our business model over the long-term is to capitalise in times of buoyant consumer spending, as our outstanding sales performance to date demonstrates," Mr McInnes said. "Equally, our business model is designed to enhance financial disciplines in times of a slowdown in consumer spending."
David Jones' performance contrasts with the most recent Australian Bureau of Statistics' data, suggesting department store sales had weakened leading up to Christmas.
Myer will not release its trading results until the end of March, however the store has reported strong trading and record crowds to its summer clearance sales.
National retail chain Harvey Norman, specialising in furniture and electrical goods, this week reported that sales growth, on a like-for-like basis, eased slightly over the past three months.
CommSec chief equities analyst Craig James said David Jones and Harvey Norman had benefited from the strong demand for digital products, such as cameras, televisions and DVD players.
I got in @ 1.04 $$'s Super Happy ! LOL
DJS Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
