Dire time at Myer
Christmas sales hit by slump
MYER has had a woeful start to Christmas, with its sales taking a sharp fall in December despite efforts to bring shoppers through its doors.
The department store chain now expects profit for the first half of the financial year to be “materially below” the $62.8 million it made in the same period a year ago.
Shares in Myer have plunged as a result to a new low of 65.5c yesterday, down 7c on Wednesday.
Myer’s total sales in the first two weeks of this month were down 5 per cent on the same period a year ago — a further deterioration on the company’s 2.8 per cent sales decline in the first quarter.
The second quarter of the financial year is typically its most profitable, and it said it was unable to provide a profit range for the half or full year due to recent sales volatility.
Chief executive Richard Umbers said one bright spot was the group’s online sales, which were up 62 per cent in the first four months compared with a year ago.
However, online accounts for only about 5.5 per cent of Myer’s total sales.
“Trading during the past two weeks has been significantly below our expectations and the year to date, and while there is an additional weekend of pre-Christmas trading this month, we do not know what the sales impact of that will be,” Mr Umbers said.
The grim performance is likely to fuel tension between Myer’s board and its largest shareholder, Premier Investments chairman Solomon Lew.
Mr Lew has been critical of Myer’s performance and its turnaround strategy.
Myer chairman Garry Hounsell said yesterday the focus on improving its online store and its productivity were the correct priorities.
“Everyone at Myer remains resolutely focused on taking appropriate steps to ensure the business can maximise the performance during Christmas and stocktake sale,” Mr Hounsell said.
Department stores have been under pressure following the arrival of overseas retailers and, now, eCommerce giant Amazon.
Morningstar analysts have said Myer was late to launch its online offering and the pressure on department stores was unlikely to let up soon.