DJs chief resists call from shareholders for his head

Angry shareholders lambasted Mr Warburton, his board and his management team at yesterday's extraordinary meeting to vote on changing the company's constitution to allow a $65 million issue of reset preference shares.

In the end the motion was ``overwhelmingly" approved, but not before shareholders vented their frustration at David Jones' flagging share price, the structure of the issue, the board's remuneration, capital expenditure and the slow progress of the Foodchain expansion.

Mr Warburton deflected calls for his resignation over David Jones' performance on several occasions during the sometimes torrid meeting.

He later told reporters it was only something he and the board would contemplate after they had had a chance to deliver on a strategy calling for 15 to 20 per cent profit growth in 2002-03 and 2003-04 and a 15 per cent return on investment.

``If we don't achieve the results then quite clearly I'd have to consider that and so would the board," Mr Warburton said.

``I'm not going to make a definitive decision on that at this particular stage because quite frankly we think it's hypothetical. Nevertheless, we'd have to be held accountable for that."

David Jones shares, down 1c to $1.06, remain mired near all-time lows.

The $2 a share issue price in the company's 1995 float, prior to a 20c capital return in mid-1999, is a distant memory.

Mr Warburton, who said board and management were as frustrated as shareholders at the weakness in the stock, also defended the costly decision to enter food retailing with the Foodchain concept.

David Jones has halted a planned 40-store rollout at only four, despite two being ``within sight of store profit" and with sales exceeding budget.

``Foodchain is not a failure," he said in response to a shareholder's question.

``We have to make sure we get the costs right so we've decided to pause the project until we make sure that we have those equations right."

While encouraged by the long term, the risks to earnings were too great in the near term.

David Jones has also cut in half its capital expenditure budget as it concentrates on its core upmarket department store business in the aftermath of what its chairman described as one of the worst retail environments in the past two decades.

Mr Warburton said the strategy had delivered increased market share and reduced costs. Third-quarter sales trends of 10 per cent overall sales and 4.8 per cent like-for-like sales have continued into the current fourth quarter.

``The cycle has turned and we have delivered an immediate material improvement in sales figures," he said.

The David Jones Online business, which has also received its share of criticism, remains on target to break even in 2002-03 and will play a crucial revenue-generating role for the retailer in future years.