David Jones delivers solid fourth-quarter sales result. Housing affordability slides: Economy Roundup

Department store giant David Jones has delivered an uncharacteristically upbeat profit forecast after beating analysts’ expectations by posting a 1.7% increase in fourth-quarter like-for-like sales.

The company also said that total sales in the quarter to 31 July rose by 7.3% to $549.6 million, and reaffirmed profit growth of between 5-10% in the current financial year.

Chief executive Paul Zahra said that while the company is cautious, it is also confident of a good result.

“The upward trend in June and July more than offset the challenges faced in May, and provides encouraging support for the view that the worst is over and that 2010-11 trading is looking more positive,” he said.

“This is particularly encouraging given the unseasonably warm weather in May 2010 and the cycling of the May 2009 federal government stimulus package.”

Meanwhile, new figures reveal housing affordability declined to an 18-month low in the June quarter due to rising interest rates.

The Housing Industry Association-Commonwealth Bank housing affordability index fell to 108.3 points in the June quarter, from 118.8 points in the March quarter, the lowest point since September 2008.

“There has been a dire lack of commitment in this federal election campaign to address the substantial hurdles aspiring home owners face,” HIA chief economist Harley Dale said in a statement.

“Helping Australians afford a roof over their head is surely a fundamental responsibility of government,” he said.

“Unless as a nation we are willing to accept that home ownership is no longer a fundamental tenet of our society worth fighting for, then substantial federal engagement in addressing plummeting housing affordability is required.”

Meanwhile, a number of positive financial results were also announced this morning, with oil giant Woodside Petroleum recording a 40% increase in profit for the first half of the year to $US901 million.

Revenue increased by 45.4% to $US2.1 billion, with the company saying production at its North West Shelf oil project will help offset some losses in natural field decline.

“Work will continue into 2011 to achieve the investment case for Pluto expansion,” the company said.

“Our concerns regarding competition for construction resources from other LNG projects have not materialised and, with the delays in drilling our 20-well program, the additional time provides the opportunity for us to further our exploration efforts.”

Property group Westfield has recorded a net profit of $961 million for the six months to 30 June, compared to a loss of $708 million during the previous corresponding period in 2009.

The company also reaffirmed its dividend forecast for 2010 at 64c per security, with operation earnings at $1.03 billion.

“In the first half of the year we have seen improving performances from our United States, United Kingdom and New Zealand businesses and a continuation of the strong performance from our Australian business,” Westfield Group managing directors, Peter Lowy and Steven Lowy said in a statement.

Both men also said retail sales performance was as expected, given the sluggish environment. Comparable specialty retail sales were up by just 0.5%.

“Retail sales performance this half was in line with expectations given last year’s first half sales were strongly impacted by the one-off government stimulus payments,” Lowy said.

Domino’s also announced a solid result, with net profit after tax gaining 16% to $17.8 million. Revenue fell by 1.2% to $236.1 million, with same store sales gaining 2.8% over the full year.

Sharemarket flat after Wall Street lead

The Australian sharemarket has opened flat today, following a solid lead from Wall Street where stocks rose by just over 1% overnight.

The benchmark S&P/ASX200 index was up by three points or 0.08% to 4480.4 at 12.25 AEST, while the Australian dollar managed to gain some ground to US90c.

Commonwealth Bank shares gained 0.1% to $50.57, while NAB shares rose 0.2% to $24.09. Westpac gained 0.1% to $22.78 as ANZ rose 0.4% to $22.49.

Meanwhile, iron ore giant Fortescue Metals Group has called on the Federal Government to clarify details about the new mining tax.

“In particular [chief executive Andrew Forrest] hopes to discuss the MRRT’s impact on Australia’s reputation as an investment destination and the impact it will have on job creation,” Fortescue said in a statement.

“The invitation proposes discussions in any open forum acceptable to Ms Gillard.”

Elsewhere, the latest results from the Westpac-Melbourne Institute leading index of economic activity was flat in June, falling 0.1 points. The index intends to show the likely pace of economic activity three to six months in the future.

“In absolute terms the growth rate of the Index is still high but it has clearly peaked,” Westpac chief economist Bill Evans said in a statement.

“This is the second consecutive month that the growth rate is above trend pointing to a very solid growth performance for the economy in the June quarter,” he said.

Boral records full-year loss

Construction products manufacturer Boral has recorded a $90.5 million loss for the 12 months to 30 June, compared with a $142 million profit in the previous corresponding period, due to several major write-downs.

Revenue fell by 4.9% to $4.49 billion, with profit excluding significant items was at $132 million.

“I attribute much of our success to the actions initiated by our management team to improve productivity of our existing operations and focus our efforts at those markets where Boral has a realistic ambition to lead,” Chief executive Mark Selway said in a statement.

Overseas, American stock markets closed higher overnight due to solid results from Wal-Mart and Home Depot. The Dow Jones Industrial Average gained 103 points or 1.01% to 10,405.85.