Strategy Overview (2674k PDF)

DAVID JONES LIMITED CONCISE ANNUAL REPORT 2001 ABN 75 000 074 573
davidjones.com.au
DAVID JONES LIMITED
CONCISE ANNUAL REPORT 2001
ABN 75 000 074 573
JOHN A SIMMONDS
Company Secretary
DAVID JONES LIMITED ACN 000 074 573
CONTENTS
SHAREHOLDER CALENDAR 2002
OFFICES AND OFFICERS
EARLY FEBRUARY
PRINCIPAL REGISTERED OFFICE
Announcement of sales for the
26 weeks ended 26 January 2002
86-108 Castlereagh Street, Sydney NSW 2000
Telephone
(02) 9266 5544
Facsimile
(02) 9261 5717 – Corporate
(02) 9267 3895 – General Retail
Telephone number for all stores
133 DJS (133 357)
Website
davidjones.com.au
MID-MARCH
1
The Power
of the Brand…2-3
Strategy Overview…4-15
2
Message from the
Chairman…16-17
CEO’s Review…18-19
Board of
Directors…20-21
Senior
Management…22-23
Corporate
Philosophy…24-25
3
Announcement of half-yearly profit
results and details of interim dividend
Financial
Results…31-48
APRIL
Scheduled payment of interim dividend
Independent
Audit Report…49
MAY
Announcement of sales for the
39 weeks ended 27 April 2002
Shareholder
Information…50-51
AUGUST
Store Locations…52
Announcement of sales for the
52 weeks ended 27 July 2002
Calendar and
Contacts…IBC
MID-SEPTEMBER
Announcement of preliminary profit
results and details of final dividend
Corporate
Governance…26-28
OCTOBER
Executive Summary
of Financials…29-30
Scheduled payment of final dividend
NOVEMBER
Announcement of sales for the
13 weeks ended 26 October 2002
The 2001 concise annual report includes financial
statements which have been derived from
David Jones Limited 2001 financial report. These
financial statements included in the concise annual
report do not provide as full an understanding of
David Jones Limited’s performance, financial
position, financing and investing activities as
provided by the 2001 financial report.
Further financial information can be obtained
from the 2001 financial report which is available,
free of charge, on request from the Share
Registry by calling 1800 652 207. Alternatively,
both the concise annual report and the full
financial report can be accessed from the “For
Investors” section at the David Jones website
davidjones.com.au
PHOTO FRONT COVER, NEW ESCALATOR VOIDS,
MARKET STREET, SYDNEY
LATE NOVEMBER/EARLY DECEMBER
2002 Annual General Meeting
Designed and produced by Enterprise Horniak & Canny
Annual General Meeting
The Annual General Meeting will be held on
Monday 26 November 2001 at 10.00 a.m. at
the Wesley Conference Centre, 220 Pitt
Street, Sydney, New South Wales. The Notice
of Meeting and Proxy Form are separate
items accompanying this 2001 concise
annual report.
The concise annual report, the full financial report and the Notice
of Meeting and general shareholder information can be accessed
on our website under “For Investors”. Announcements made to
ASX during the year are put on the website.
COMPANY SECRETARY
John A. Simmonds
FCIS ASIA
SHARE REGISTRY
Computershare Investor Services Pty. Limited
Level 3, 60 Carrington Street, Sydney NSW 2000
GPO Box 7045, Sydney NSW 1115
Telephone
1800 652 207 Toll Free
Facsimile
(02) 8234 5435
Website
computershare.com
Shareholders can access from the David Jones website under
“For Investors” information and services relevant to their holding,
including dividend payment history details.
Anyone can visit the Share Registry website to access a range
of information about David Jones Limited including the closing
price of David Jones Limited shares, graphs showing market
prices over a requested period and graphs showing volumes
traded over a requested period.
Shareholders can register their email address through
the Share Registry website to receive shareholder
communications electronically.
STOCK EXCHANGE
The Company is listed on the Australian Stock Exchange.
The home exchange is Sydney.
1
ANNUAL REPORT 2001
THE POWER OF THE
DAVID JONES BRAND IS
BEING HARNESSED TO DRIVE
THE COMPANY FORWARD
2
“First and foremost, we are the managers of
one of Australia’s most valued brands. The
power of the David Jones brand is being
harnessed to drive the company forward. We
remain completely focused on continuing to
improve our business, our relationship with
our customers and the value of our company.”
Peter Wilkinson – CEO David Jones Limited
PRESENCE
Market Penetration: We will increase our selling space significantly over
the next three years, and will also dramatically improve the efficiency
of our stores. We are improving selling space ratios across our
portfolio, including our city stores, to help drive enhanced sales and
profit results from our stores group.
DELIVERY
New Ways to Service our Customers:We are continually improving our levels
of service, enhancing our range of products and brands, and developing
new ways to interact with our customers. There can be no sitting still in
this business; we must continue to evolve and improve our offer.
LEVERAGE
Diversification: How can we leverage the strength of our brand and the
knowledge we have of our core customers to develop new products and
services that will help grow our business? Foodchain by David Jones is
the first step…
3
THE POWER OF
THE BRAND
4
Brand Presence: We are improving both the efficiency and
ambience of our stores. We are seeking the perfect marriage
of an environment that stimulates our customers, ensures
they feel at home and therefore encourages them to shop,
while simultaneously providing a better model by which to run
our stores. It is a simple equation – increased sales in a more
efficient environment equals an improved store profit
contribution. We will increase our selling space significantly
over the next three years. The results from the stores
completed so far have been impressive.
5
PRESENCE
6
“Increased sales from a more efficient store environment leads to
improved profit contribution.”
Our Stores Program
We have embarked on a large-scale capital
works program designed to ensure we have
the most efficient stores network possible,
while providing shopping environments that
match our brand positioning. By 2004/2005,
this $275 million program will increase our
selling floorspace by over 20%.
The targeted outcomes of our stores
program are to:
meet our financial performance targets
increase sales revenue
improve the appeal of our stores to
our customers
improve the selling space ratios of
the store (make more space available
for selling)
ensure the right merchandise mix is
in place to maximise profit and sales
opportunities
reduce running costs by improving
store logistics.
We want to make one point clear – our
stores program is about much more
than maintenance or visual appeal.
Improvements in supply chain management
and store design are allowing us to reclaim
space currently being used for other nonselling purposes such as stock handling.
This means we can respond to customer
demand and present a more complete
offering by introducing new categories of
merchandise. Increased selling space
combined with greater store efficiency drives
profit contribution.
Case Study – Adelaide CBD
In our Adelaide city store, while we
decreased its overall size by 32%, we only
decreased the selling space by 2%. The new
store design provides an improved customer
flow around the shop floor. Enhanced lighting
and fixtures showcase the expanded range
of products and brands available as well as
improving the ability of our customers to see
and reach the product.
The Adelaide store was awarded “Store of
the Year” at the 2000 International Store
Design Competition held in the United
States. This is the first time an Australian
7
OUR STORES PROGRAM IS ABOUT MUCH MORE THAN VISUAL APPEAL
retailer has won the overall award and in
doing so, we were placed ahead of 200
world-renowned retailers.
Since the Adelaide store opened in August
2000, customer feedback has been
extremely positive. Sales and contribution
to group profit have been consistently
above expectations.
Budgeting for Refurbishments
The team at David Jones has spent a
considerable amount of time establishing
what level of capital spend is genuinely
needed in order to produce the required
results in terms of financial return.
The spend will vary from store to store.
Our city stores are the lynchpins of our
brand positioning. These stores because
of their size and location require more
capital than our suburban stores.
The refurbished stores demonstrate the
progression of the David Jones brand.
They closely match the key requirements
our customers desire in a shopping
environment – a comfortable, stylish
environment which allows ample freedom
of movement, has good lighting and
well displayed stock which can be
accessed easily.
The Best Product Presentation
Our
merchandising,
stores
and
development teams are working closely
together to deliver a store environment
that provides both functionality as well as
visual appeal.
The world’s top brands are highly
protective of the way in which their
products are displayed and sold. The right
selling environment is imperative. Our
refurbishment program will allow us to
continue to attract and secure some
of the world’s most exclusive and
leading brands.
8
Brand Delivery: A department store is an evolving business.
We are constantly striving to enhance our product range, find
better ways to serve and interact with our existing customers,
as well as attract new customers to David Jones. Part of our
management philosophy is we must constantly refresh our
product range to ensure we have the best possible offering.
We continue to search for new mediums, including the
Internet, through which to communicate and develop our
customer relationships.
9
DELIVERY
10
PHOTO BOTTOM RIGHT, FROM LEFT TO RIGHT, PETER MORRISSEY, COLETTE GARNSEY, DAVID BUSH, MARK KEIGHERY
“We are constantly striving to enhance our product range, find
better ways to serve and interact with our existing customers
as well as attract new customers to David Jones.”
Over the past four years, the David Jones
team has reinvigorated this icon brand.
We have completely updated our product
selection, considerably increased service
standards and improved the way in which
we communicate with our customers.
Brands and Products
David Jones continues to introduce well
known Australian and international brands
including the leading Italian furniture maker
Natuzzi, apparel and accessories brand
Burberry and the Sisley range of cosmetics
and fragrances. This year Ella Bache
became exclusive to David Jones as a
department store.
Key alliances have also been developed with
leading Australian designers Peter Morrissey
and Mark Keighery. A series of Peter
Morrissey concept stores is being developed
and will appear in stores towards the end
of the year. The high profile Marc’s brands –
Baby Doll, Diesel, and Marc’s Men’s and
Women’s are also being introduced to
David Jones.
We are being increasingly acknowledged
by our suppliers as a true brand-building
partner. We respect the work being
done by our supplier partners on the
positioning of their brands and seek to
develop mutually successful outcomes in
terms of how we sell, display and
communicate their products.
We have developed strategies to allow us to
build a stable of brands, which are either
exclusive to David Jones as a department
store, or totally exclusive to David Jones in
Australia. We are dedicated to continuing to
present the best brands in the world to
our customers in a comfortable, stylish
environment with knowledgeable sales
assistants in order to enhance their
shopping experience.
Our Service Standards
David Jones instituted the Five Star
Customer Service Program in 1997. The
program is designed to provide continual
training for our staff based around five
service non-negotiables. Our research tells
us we have a significant service level
11
VISIT US AT DAVID JONES ONLINE – davidjones.com.au
advantage over our major competitor –
a crucial edge we intend maintaining.
Service is about much more than simply
putting staff on the floor. We aim to ensure
our people are knowledgeable about
the products they are selling so they can
help customers make the right decision.
It is also important for our staff to make
our customers feel special and valued at
all times.
This takes a long-term commitment to
training and the provision of the best sales
environment possible. We talk with our
customers continually to understand what
they value in a store environment and how
we can make their shopping experience
more pleasurable and productive.
David Jones Online (davidjones.com.au)
Our Online business provides an additional
way for customers to interact with
David Jones. Over time the online and
stores parts of the David Jones business
will operate seamlessly. We believe that the
online business will be an increasingly
important competitive tool going forward
David Jones Online was launched in
October 2000. There are now eight key
categories available on our site – Beauty,
Women, Men, Children, Homewares,
Leisure, Gifts and Christmas Hampers.
We conducted a phased introduction
of categories containing products that
relate well to an online environment.
Our knowledge of the department store
market and our customers has meant that
we have very low levels of product return
relative to the market.
Gift solutions and promotional leverage
opportunities are strengths for the online
business. Customers appreciate having
the ability to look for gift or product
suggestions, browse, select an item and
where necessary have it wrapped
and delivered throughout Australia. Online
customers can register to receive
information from us by email. Many
existing online customers are receiving
information in this way.
We hope you will take the opportunity to
visit us at davidjones.com.au soon.
12
Brand Leverage: At David Jones we have developed a high
level of understanding about the wants and needs of our
core customers. We have examined how we can leverage
the strength of our brand and our customer relationships to
grow the David Jones business. Foodchain by David Jones is
the first step…
13
LEVERAGE
FOODCHAIN BY DAVID JONES PARRAMATTA, NSW
14
“How can we enhance the great relationships we have built with
our customers to grow the David Jones business? Foodchain by
David Jones is the first step.”
David Jones continually works towards the
development of long-term relationships with
its customers. We regularly research our
customer base to benchmark our
performance and establish how we may
serve customers in new and improved ways.
Foodchain by David Jones
The way Australians shop for groceries has
changed dramatically in recent years.
Changes in lifestyle, such as an increase in
the number of working women and the
number of part time and casual workers,
have led to changes in the way we shop for
food. We are shopping more often; in fact,
60% of people are shopping twice a week or
more. There has been a marked return to
“just in time” shopping.1
1
Source: AC Nielsen “The Way We Shop” 2000
In researching the typical David Jones’
customer, we found that by 4pm almost
90% did not know what they would be
having for dinner that evening.
Convenience, inspiration, accessibility,
quality and value are what our customers are
looking for when shopping for food and they
have told us that traditional supermarkets are
not addressing their needs.
Unlike the traditional David Jones food halls
run as part of the department stores group,
Foodchain is a separate business. The range
includes fresh fruit and vegetables, bread,
meat, seafood, wine and delicatessen items
focused on providing a one stop convenient
cost-effective meal solutions format.
Three aspects are critical to the Foodchain
offer – location, access and quality produce.
Stores are located in areas where there is
a critical mass of our core customers.
Proximity to major transport hubs, parking
and easy accessibility are important
considerations, for this reason our
stores will tend to be in small shopping
developments or in strips. Produce is
sourced locally to ensure optimum quality
and freshness.
Service is another key factor in the
Foodchain stores. Our customers told us
they wanted staff on hand who really knew
food well and could give them advice
on selection and preparation. Many of our
staff have run their own food businesses,
15
FOODCHAIN IS AN INVESTMENT IN THE FUTURE GROWTH OF DAVID JONES
including restaurants, and they are
passionate about the food business.
Restaurant trained chefs oversee the
production of the take-home meals, side
dishes and salads and assist customers
with their selections. More than 30 meals,
selected on the basis of seasonality and
produce availability, are on offer at any trip to
Foodchain. The menu changes constantly.
Approximately 10% of a typical Foodchain
store consists of a range of around
4,000 convenience grocery items at
competitive prices. Another 6% consists
of a top quality liquor offer to assist in
completing your meal. There is also a small
coffee shop.
Performance to Date
The first three Foodchain stores are now
open at Brighton and Hawthorn in
Melbourne and Parramatta in Sydney.
Several more stores are due to open in 2002.
Our plan is to open 40 stores over five years
(2001-2006) at which point Foodchain is
forecast to contribute significantly to both
sales revenue and profit.
Foodchain is an investment in the future
growth of David Jones. While it is a niche
offering targeting less than 1% of the
A$55 billion food and grocery industry, it
will provide important exposure to a
different part of the retail sector.
BRIGHTON, VICTORIA
HAWTHORN, VICTORIA
PARRAMATTA, NSW