By Anhar Khanbhai

David Jones has recorded a 3.1% drop in second quarter sales owing to a challenging retail environment, as the department store retailer reaffirmed its first half guidance.

David Jones Limited on Thursday posted total sales revenue of $598.5 million for the second quarter of the 2012 financial year to January 28.

Like-for-like sales revenue for the period was down 2.4% on the same time the previous year.

The company said sales for the first three weeks of the third quarter of fiscal 2012 had been broadly in line with David Jones' second quarter performance.

"The company reaffirms its first half of fiscal 2012 profit after tax guidance of minus 15% to minus 20% and expects the current challenging retail conditions to continue throughout calendar 2012," a statement from David Jones said.

CEO Paul Zahra said despite the tough trading conditions there had been an improvement in the second quarter of fiscal 2012 versus the first quarter of the year.

"Trading conditions continue to reflect the uncertainty in the macro-economic environment with conservative consumer shopping continuing and no material signs that this is changing," he said.

"Nonetheless, we did see an improvement in December 2011 and January 2012, compared to October 2011 and November 2011, which, in turn, were better than August 2011 and September 2011."

First half sales were $1,012.9 million, down 6.6% on the previous year.

The company said sales on a state-by-state basis were consistent except for Queensland which had shown signs of improvement in the wake of the January 2011 floods.

However, electrical continued to be the most challenging category.

"Pleasingly, there was an improvement in the performance of our high-value demographic stores compared to the first quarter of fiscal 2012," Zahra said.

Clearance trading was pleasing following a decision to limit category-wide discounting during the pre-Christmas trading period.

"We are pleased with the good progress we are making in clearing our excess inventory and whilst we are confident that this will be cleared in full year 2012, as previously flagged, this will have an impact on our gross profit margin performance in both the first and second half of fiscal 2012,” Zahra said.

The company recently launched a bridal boutique to take a slice of the $4.3 billion bridal market.