Struggling Myer sticks to its plan

MYER chief Richard Umbers says he will not fall back on heavy discounting, arguing traditional sales events such as stocktake clearances are losing their pulling power over shoppers.

Mr Umbers has backed his turnaround strategy for the department store chain, which yesterday cut its profit forecast and took major writedowns on key brands including its failed Topshop experiment, sending its share price to a record low.

The retailer also announced deputy chief executive Daniel Bracken was leaving the business, in a trading update that largely wipes out its full-year net profit.

Shares in Myer plunged almost 10 per cent to close at their lowest level since it listed at $4.10 in 2009.

The rout extends the paper loss at Premier Investments, backed by retail veteran Solomon Lew, to $37 million.

Premier shelled out $102 million in March to grab a nearly 11 per cent stake in the chain at $1.15 a share.

Mr Umbers said in a “persistently difficult” retail environment, consumers had kept wallets closed during Myer’s mid-year stocktake sale.

Rival David Jones this month posted its first drop in like-for-like sales, which strips out the effect of stores opening or closing, since it was bought by South African retail group Woolworths Holdings.

Mr Umbers is two years into a five-year turnaround strategy at Myer. A key part of the plan is to attract shoppers by creating unique in-store experiences — such as ice skating rinks and appearances by pop star Katy Perry — rather than by constant discounting.

Myer has cut its target for underlying profit to between $66-70 million for its 2017 financial year, which finishes this month.

It had previously pledged to deliver its first underlying profit growth since 2010, beating last year’s $69.3 million.

It has written off the full value of its 20 per cent stake in Topshop at a cost of $6.8 million. It will take a $38.8 million hit on its Sass & Bide brand and absorb $18-20 million in restructuring costs. The combined hits are likely to wipe out most of Myer’s net profit.

Shares in Myer closed 9.8 per cent lower at 73.5c.