By Kymberly Martin

David Jones is still experiencing price deflation, particularly on electronics which remain under a lot of pressure and is expected to continue, said chief executive, Paul Zahra. “We are fortunate being a department store that we can focus on high margin categories like fashion.”

Zahra was speaking to the media after the AGM on Friday and responding to a question from RetailBiz about margin compression.

Zahra said prospects for 2013 remain “challenging.” And, the biggest challenge of all is consumer sentiment over which he has no control. Retiring chairman, Bob Savage agreed saying if consumer sentiment did not change results will be good but not exceptional. "Everything is heavily dependent on what happens in the economy. It needs an environment for people to feel good about the economy and spend money.”

"The retailer is not expecting any rise in Christmas sales with results expected to stay flat as consumer sentiment continues to drag on company performance," Zahra said.

Speaking earlier at the AGM, Zahra told shareholders the company was highly focused on the Christmas quarter and “meeting all the challenges that the macro economic environment may throw at us.”

He said despite the short term outlook of challenging retail conditions, as with all economic cycles, a trough is followed by a peak and the company was using this time to prepare for the future.

The strategy to implement a cost-saving structure across several categories would be expanded by working with suppliers to achieve global cost price harmonisation.

This initiative delivered retail price reduction across hundreds of SKUs categories that included electronics. “We don’t see why our customers should be paying more and every cost reduction is a passed onto the customer,” Zahra said.

David Jones has signed leases for six new stores with the first to open in Highpoint Victoriain Q1. In addition to new full line department stores the retailer plans to open several village format stores. Zahra said that recently refurbished stores at Warringah Mall in NSW, Chadstone in Victoria and Marion in South Australia are all trading well.

This article first appeared on TTmag.com.au