The South African retailer that owns David Jones and Country Road says consumer spending in Australia is being suppressed by low wage growth and underemployment.
Woolworths Holdings, which is not related to the Australian supermarket giant, said Australia's growth relies on commodity prices and improvement in China's economic growth.
"Despite record low interest rates and rising property prices, consumer confidence is muted by employment skewed towards part time work, low wage growth and global uncertainty," the company said on Thursday.
It said its department store business David Jones had a four per cent lift in sales during the six months to December 25.
David Jones' comparable sales, which strips out new store openings, rose 0.5 per cent while profit before tax increased 2.9 per cent to $105 million.
The demise of Dick Smith electronics chain, which had concession stores at David Jones, weighed on David Jones' sales.
The Country Road Group, which houses the Country Road, Trenery, Witchery and Mimco brands, was hurt by intense discounting from the mid-market retailers with sales dipping 0.9 per cent.
Woolworths said David Jones and Country Road Group's sales were impacted by the timing of the Boxing Day sale, which falls into the second half of this financial year.
While Country Road Group's acquistion of Politix in November had a positive impact on sales, it said.
On outlook, Woolworths said it expects a slight improvement in consumer confidence in Australia this year but heavy discounting activity appears set to continue.
Latest jobs figures released on Thursday showed Australia's unemployment rate fell to 5.7 per cent in January, from 5.8 per cent, with the 13,500 lift in the number of jobs entirely in part-time work.
Share
