What a difference a well-run credit card operation makes to a
department store. It’s the difference between being a well performing
David Jones, and Coles Myer’s struggling Myer chain, or so it seems
from DJ’s 2005 results,
released today.

David
Jones announced a profit before interest and tax of $108.8 million, a rise of 14.2%, which
is certainly far better than Myer. Myer’s EBIT was $38.7 million, down from
$71.9 million in 2004.

Myer
experienced losses in the second half and David Jones acknowledges that it too
found the going tough as slowing house prices and rising oil prices distracted
consumers. But a
look at David Jones profit reveals that the department stores EBIT was up 13.7% to
$73.9 million from $65.0 million a year earlier.

The
credit card business was a better performer, its EBIT
jumped 16.6% to $32.2 million. The attraction of owning a
credit card business is shown by its EBIT margin of 5.9% (5.2% a year earlier)
compared to 4.1% (3.7%) for the department stores.

The
absence of a credit card is clearly something that still disturbs Coles Myer’s
CEO, John Fletcher. He was
asked about the impact of such an absence and about the decision by the
company to sell it before Fletcher started at
Coles Myer. He said
that it was a decision by previous management and GE
Money now had the card.

But
that card business merely adds cream to what is clearly a far better performing
business at David Jones Department stores than at Myer. The
management is better, the merchandising’s more
attractive and the pricing keener. Customers seem happier to part with their
hard earned at DJs than at Myer, especially in the tough second
half.

Stories
around last weekend that Myer CEO, Dawn Robertson, was looking to jump were
discounted by Fletcher in an interview on Business Sunday at the
weekend. They
were confirmed yesterday by the woman herself who said in a well-leaked email to
staff, that she was staying.