David Jones swipes Country Road from Myer as profit halves
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David Jones swipes Country Road from Myer as profit halves

Myer will have more than a few empty shelves to fill when arch rival David Jones' parent company yanks the brands it owns including Country Road from the struggling department store.

South African group Woolworths Holdings on Thursday revealed that David Jones' profit fell by 50 per cent to $64 million in the year to June 24, but had returned to its strongest sales growth in three years after seeing through the worst of a painful turnaround strategy.

David Jones' profit fell by 50 per cent.

David Jones' profit fell by 50 per cent.

Photo: Louise Kennerley

David Jones said sister brands Country Road, Mimco and Politix - all owned by Woolworths - would become exclusive to its department stores in 12 months' time in an effort to differentiate it from its competition.

"The exclusivity... to David Jones will be a major step in differentiating our unique brand portfolio and providing our customers with an unrivalled department store experience," said David Jones chief executive David Thomas.

“We are proud to exclusively offer our customers some of Australia’s most loved brands," he said.

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The group said it had also signed up the brands Isabel Marant, Scotch & Soda, Kenzo to exclusive deals as part of a strategy to ensure as many of the products it stocks as possible are not available at Myer or other stores.

Woolworths' CEO Ian Moir said it would lose about $5 million in profit from the Myer channel in the first year, but was confident of making that back over time through higher-margin sales at David Jones and the brands' stand alone stores.

"I'd never cut off a shareholder's nose to spite his face," he said. "This is the right business decision."

Mr Moir said David Jones' plunge in profit and 0.4 per cent fall in full-year comparable sales was caused by the disruption from renovations at its flagship store on Sydney's Elizabeth Street, the implementation of new back-of-house systems, the launch of its in-store food concept, and moving its head office from Sydney to Melbourne.

But the pay-off from these initiatives saw sales bounce back to 2.7 per cent growth in the second half, and hit 3.7 per cent for the first seven weeks of the new financial year - David Jones'  strongest sales growth in three years.

“It’s had a heavy toll but it had to be to done," Mr Moir said.

Sales at the Country Road group fell 1.8 per cent, driven by poor sales of the brand's womenswear and offset by strong performance at Witchery, Mimco and Politix.

Profit rose 5.1 per cent to $103 million, thanks to less discounting and more sales of full-priced items.