David Jones Limited (DJS) today announced that it has entered into a new 20-year agreement for lease (AFL) with AMP Capital for its Karrinyup (WA) store. The existing Karrinyup lease expires on 16 September 2013. The Karrinyup Shopping Centre (which is managed by AMP Capital) serves a main trade catchment of 195,000 people with average household income of $83,989 p.a. in line with that of Chadstone (Vic) and Southland (Vic), two of their best performing suburban stores.
David Jones currently operates a ~9,500 square metre store in the Karrinyup centre. The centre also contains a ~14,000 square metre Myer store. The David Jones Karrinyup store under performs against the David Jones benchmark for similar catchments due to its restricted space and limited brand offering. To capitalise on the opportunities available in the Karrinyup catchment David Jones would like to expand its existing store to a full line ~13,000 to ~14,000 square metre department store. This would improve David Jones’ competitive positioning relative to Myer and maximise sales and profit in a proven, established two department store centre.
The AFL is on attractive commercial terms in line with the more favourable David Jones leases, meets all the Company’s required KPIs and delivers to David Jones at least a 30% increase in trading space from its existing floor space of ~9,500 square metres to ~13,000 square metres. AMP Capital and David Jones are working together with a view to ensure that the expanded ~13,000 square metres store is completed and handed over by 17 September 2013. As part of the FY09 – 12 Strategic Plan David Jones identified Perth as a region with significant growth opportunity for the Company with Department Store penetration in Perth low at 7%, given the Australian average of 11.1% in other metropolitan regions where David Jones operates stores. Added to this, Perth is projected to be the fastest growth department store type merchandise (DSTM) market, with growth estimated at 5.6% per annum in future years. Within Perth the northern region has the highest growth potential and most attractive demographics. Population in the northern region of Perth is approximately 530,000 and is growing at 3.1% p.a.
David Jones CEO Paul Zahra said, “In light of these factors Northern Perth has been identified as a target area with significant growth potential for David Jones. “This has effectively enabled us to lock-in a dominant position in the high value, high growth northern Perth region,’ Mr Zahra said.
http://www.traderdealer.com.au/Fundamentals/djs
Tags: David Jones, DJS, New lease, Retail
