Nicosia, Dec 5, 2006 (ABN Newswire) - Retailer, David Jones is a bit of an anachronism: of all the country's major retailers, it has kept its in-house credit card and survived to enjoy it.

It's highly profitable and in 2004 and 2005 it helped the retailer ride out a rough patch or two.

And after last Friday's annual meeting there's a sense that the card will be the centrepiece of the new strategy the company is due to reveal in mid-2007.

Big retailers like Woolworths have tried to find a card/financial services option without too much success: the Ezy Banking joint venture with the Commonwealth Bank has been changed and is no longer exclusive.

Both Woolies and the CBA will be able to look for partners from other banks or retailers from 2007, which will be a boost for someone like David Jones because it means there will be competition for a financial services venture with the retailer which hosts some of the country's wealthiest consumers in its 36 department stores around the country.

Friday's AGM heard a hint or two about the new strategy and financial services' part in that: but not much.

CEO Mark McInnes told shareholders that "Looking beyond FY08 to the longer term, we believe we have a number of attractive growth opportunities that will enable us to continue our track record of delivering ongoing shareholder value and returns. I firmly believe our Company has a very exciting and lucrative future.

"These longer term growth opportunities include: expansion of our store portfolio; development of our Financial Services business with specific focus initially on the introduction of a "general purpose card"; and expanding our core business EBIT through the continued expansion of our brand portfolio, reduction of our CODB and continuing our refurbishment program."

There was a suggestion the new card/financial services move wouldn't be seen until 2009.

The company is working on its latest expansion plan, with the new Burwood store fitout due for completion shortly and new stores in Brisbane and Melbourne to open over the next 18 months. The cost is being financed by reactivation of the Dividend Re-investment Program.

So it would seem that the financial services move will have to wait until management completes the new store building and refurbishment program now underway (e.g. Market St, in Sydney).

The card is very juicy for DJs: in 2006 it made $34.6 million in earnings before interest and tax, compared to total group EBIT of $11.9.6 million. That was up 28 per cent and the share of the total from the cards business was 28 per cent.

That was less than the proportion in 2005 when the cards made a third, or $32.1 million, of total group EBIT of $95.2 million.

The irony is that David Jones was criticised in the late 1990s for keeping its card after Coles Myer flicked its Myer card business to GE: that was one of the 'clever' moves by the then Coles management which came back to bite later administrations as Myer's operations went awry.

Earnings from a card business helped David Jones in tough times after the millions lost in the Food Chain expansion that failed: they would have helped Myer no end and made it even more attractive to buyers during the recent sale process.

Now the cards have helped David Jones survive, they are part of the mix for the new strategy: a general card able to be used across all businesses.

David Jones chairman Robert Savage told Friday's AGM that the retailer had many long term opportunities available which will deliver growth in shareholder value and dividends.

"We are confident that the programs implemented over the past 12 months will continue to deliver profit and dividend growth for shareholders in fiscal 2007 and fiscal 2008," Mr Savage told shareholders.

"We believe our company has many long-term opportunities available to it and a very bright future, enabling it to continue to deliver growth in shareholder value and dividends."

Mr Savage also said the retailer was reviewing opportunities and strategy for the period from fiscal 2009 to fiscal 2012 and would tell the market in mid-2007.

David Jones posted a net profit of $81.1 million for 2006, up 19.3 per cent and earlier this month reported first quarter sales of $430.3 million, up 6.3 per cent on the same period last year.

It has forecast a five to 10 per cent lift in underlying net profit for this year and fiscal 2008.

David Jones shares fell on Friday after the AGM but recovered yesterday to close at $3.82.
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About ISX Financial

ISX Financial

ISX Financial EU PLC is a 'banktech' company that leverages its own technology to provide financial services to merchants across the EEA & UK.  The company's combined payments stack and infrastructure provides a complete end-to-end transactional banking, FX, remittance and payment processing capability. 

ISXMoney's multi-Currency IBAN accounts coupled with PaidBy Bank instant open banking provide merchants with a tailored payment solution to reach any UK or EEA bank account holders.

ISX Financial's consumer product "flykk" is a digital wallet that combines all its financial technology and infrastructure to create a retail product. flykk(R) is a two-sided network developed on ISX's own platform that links both merchants and consumers around the globe to facilitate the processing of payment transactions. flykk(R) allows customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds, with the benefits of a Diners card for point of sale transactions.

ISX Financial's subsidiary Probanx(R) also develops payment infrastructure for third parties, and provides connectivity to central banks, banks around the world and major card schemes.

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