Australian retailer David Jones sees sales, profit hit

July 13 - Australian retailer David Jones said it expects its profits to fall below analysts' expectations for the current year following a "dramatic and rapid" deterioration in trading conditions.

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The department store chain said it expected its after tax for the 2011 financial year which runs until the end of July to come in 6-7 percent under analyst expectations. Profits in the second half of 2011 were set to drop by 9 to 12 percent from the same period in 2010.

"The dramatic and rapid deterioration in trading conditions in Q4 2011 has been unprecedented," David Jones CEO Paul Zahra said in a statement on Wednesday.

David Jones forecast sales in the fourth quarter to fall by about 11 percent.

Profits after tax for the full financial year 2011 were seen declining by 0.5 percent to 2 percent versus a year ago, equating to between A$167.7 million ($177.8 million) and A$169.7 million, the company said in a statement.

Analysts had forecast net income of A$179.7 million for the full year ending July 2011, according to Thomson Reuters.

The company said it expects sales in first quarter of 2012 to suffer as well, dropping by 15 to 20 percent compared to the same period in 2011 with profits of A$84.5 million to A$90 million, but said it was premature to provide guidance on the second half of 2012.

David Jones' statement was a turnaround from its forecast in May, when the company said that if consumer demand continued throughout the fourth quarter, the company expected to see a 5 percent increase in profits in the second half of the year.

Australian retail sales unexpectedly fell 0.6 percent in May, the biggest drop in seven months and another sign of consumer caution, data earlier this month showed.

Shares in David Jones closed down 1.8 percent at A$3.91 on Wednesday, near a two-year low. The stock has fallen as much as 20 percent since April amid concerns about the retail and global economic outlook.

(Reporting by Rebekah Kebede; Editing by Lincoln Feast)

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