By Aimee Chanthadavong

Despite intensive discounting and promotional activity followed by two cycles of the Government Stimulus packages, David Jones (DJs) has reported a steady increase in its profits for the year ended 31 July 2010.

The department store chain’s profits increased by 9.1 per cent from $156.5 million in the previous year to $170.8 million.

Paul Zahra, DJs CEO, said the company is delighted with its highest profit results and record dividend since 1995.

“We are two years into our FY09 – FY12 strategic plan and I am pleased to advise that we are ahead of our stated targets. For the two years since FY08, PAT has a compound annual growth rate of approximately 12% p.a. compared to our target of 5 to10 per cent growth per annum (p.a.) and over the two years we have reduced our Cost of Doing Business (CODB) by 140 basis points (bp) compared to our four-year target of 50 – 80 bp,” he said.

According to Helen Karlis, DJs general manager corporate affairs and investor relations, the company performed best in traditional departments of womensewear, accessories, menswear and childrenswear.

Zahra also said the company is well positioned to fully leverage the next upturn in the economic cycle following the completion of four key refurbishments. Its Bourke St Mall (Vic), Claremont (WA), Kotara (NSW) and Wollongong (NSW) stores are due to be completed in FY11 and FY12.

“The refurbishment of these four stores will deliver an increase in selling space in FY11. Over and above this increase, the Company is reallocating space to high margin, high growth categories which will deliver not only an increase in sales but also an improvement in the Company’s GP Margin,” Zahara said.

Similarly, Karlis said those stores were chosen for refurbishment due their high growth rate.

Also planned in FY11 and FY12 are 1,000 new branded installations including Nine West, Quiksilver, Roxy, Collette by Collette Dinnigan and Thomas Pink.

“The 1,000 new brand installations will add to the company’s existing range and is expected to deliver EBIT contribution in FY12 equivalent to undertaking three to four standard refurbishments,” Karlis said.