Retail giant David Jones reported significant losses in the third quarter of the 2012-2013 financial year.

Retail giant David Jones reported significant losses in the third quarter of the 2012-2013 financial year. Retail performance has been declining and while men’s and children’s clothes are selling well, the normally reliable women’s departments has declined. CEO Paul Zahra has attributed much of the decline to the divestiture of its home electronics department and the uninspiring figures from the discount-sales calendar. In contrast, David Jones’ main competitor, Myer, reported growing sales for the same period. However, Zahra thinks it likely Myer will need to discount its winter stock heavily as a result of unanticipated warm weather, whilst David Jones’ inventory has been managed so that this will not be the case for the retailer. Zahra identified that it was unlikely consumer spending would increase until after the federal election in September despite recent RBA rate cuts.

Source: Adapted from B. Speedy, 2013, “Discounting is unsustainable, says DJs amid 2.2pc fall in Q3 sales”, The Australian, 27 May 2013 http://www.theaustralian.com.au/business/profit-loss/discounting-is-unsustainable-says-djs-amid-22pc-fall-in-q3-sales/story-fn91vch7-1226651165146.

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Given the above information, conduct a situational analysis of David Jones’ current position.

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