Disappointing Web site performance is being cited as a key contributor to a top-level shake-up at David Jones, underlining the executive cost of the retail sector's difficulties in making business-to-consumer e-commerce work.

Analysts and media commentators have pointed to the disappointing performance of David Jones Online as among the reasons for chief executive Peter Wilkinson's decision, announced yesterday, to stand down. The Australian Shareholders' Association (ASA) is also agitating for the removal of chairman, Dick Warburton and another director, Reg Clairs, for their roles in creating so-far underperforming new businesses such as the online arm and food.

ASA director, Stephen Matthews, said while he "wouldn't characterize the online result as disastrous," it had lost $2.4 million last year and failed to back up management claims it was "one of Australia's most successful retailing Web-sites".

He also questioned the move to integrate the Web site's results into the core department before reaching profitability, presently targeted for the 2003 financial year. "Sounds to me like a move to avoid future results disclosure.

"One would have to question whether or not the online business is suitable for David Jones' department store demographic," Matthews said.

The ASA renewed its campaign after David Jones released full-year results today that revealed a 77 per cent fall in net profit after tax to AU$6.6 million, driving the company's earnings per share down from 7.1 cents to 1.5 cents. The campaign against its board is understood to stem primarily from David Jones' participation in the Foodchain business, which forced it to incur an $AU19.5 million writedown.

The director of the Web research group Global Reviews, Dr Adir Shiffman, said David Jones had pushed too many resources into enhancing the Web interface, while not giving consumers a compelling reason to purchase online.

"I think that their biggest downfall has been a lack of establishment of a unique selling proposition for the online interface," said Shiffman.

"[The site] was very good 12 months ago and I'm not sure how much of a benefit the additional expenditure has actually conferred on the site," said Shiffman.

David Jones today singled out Web development expenditure as a significant one- off item for the operating year to July 27, 2002, costing the company AU$7.6 million dollars.

Shiffman declined to back up Matthews' remarks that integrating the online business was a move to diminish accountability, saying the move made sense and was consistent with local and global trends in online retailing.

He said he believed Coles-Myer would probably soon follow suit, folding its online retail business, e-Coles into its core retail business.

David Jones failed to respond for requests for comment before press time.

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