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David Jones

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ASB INVESTMENT RESEARCH Prepared by: Marc Hemsin – 3386122 Juthakarn Jessica Suwanasilp – 3344346 Tu Lan – 3282178 Bo Qiu - 3308317 DAVID JONES - BUSINESS ANALYSIS AND VALUATION May 2012 ASB INVESTMENT RESEARCH T A B L E O F CONTENT 1. EXECUTIVE SUMMARY 2. DAVID JONES’ PROSPECT AND THE RETAIL INDUSTRY 2.1 INDUSTRY ANALYSIS 2.2 COMPANY ANALYSIS 3. ACCOUNTING AND FINANCIAL ANALYSIS 3.1 ACCOUNTING ANALYSIS 3.2 FINANCIAL ANALYSIS 4. FORECAST AND VALUATIONS 4.1 FORECAST ASSUMPTIONS 4.2 COST OF CAPITAL – WACC 4.3 VALUE OF DAVID JONES 5. CONCLUSION 6. REFERENCES AND APPENDIX ASB INVESTMENT RESEARCH 1. EXECUTIVE SUMMARY DAVID JONES LIMITED - DJS Recommendation Valuation $2.20 Last Price $2.25 52 Week Range 4.35 - 2.16 …show more content…

By emphasising on product quality and customer service, it differentiated itself in the Australian market as the leading branded department store with 174 years heritage (DJS Announcement, 21st March 2012). However, David Jones currently faces significant threat of the structural changes of the modern retail industry. The globalisation effect of the internet has brought in greater global price comparisons, hence more competition from high growing online retailing. This includes not only domestic and international online retail pure-plays but also bricks and clicks retailers, brands selling through aggregator websites, as well as established international retailers opening stores in Australia. This threat is detrimental to David Jones as its weakness is its failure to keep up with technology and invest in its online store chain. In addition, David Jones is facing high and increasing funding costs. Nevertheless, there is still an opportunity for David Jones to be present in the new technologies distribution markets and appeal to online customers. Strength  Strong brand affinity 

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