MYER A VICTIM OF ITS TIMES: EXPERT
A RETAIL expert says Myer’s five-year turnaround strategy may be faltering due to tough trading conditions, timid consumers and a highly competitive landscape.
Deutsche Bank retail analyst Michael Simotas said following David Jones’ full-year update on Friday that retail trading conditions in the second half of the financial year had proved to be particularly tough for Australian retailers.
David Jones’ South African owner Woolworths said the Aussie department store sales covering the 52 weeks to June 25 rose by 1 per cent in Australian dollar terms, but the crucial comparable sales – which strip out the benefit of store openings – fell 0.7 per cent.
Mr Simontas said retailers across Australia had had overweight inventory positions due to subdued Christmas trading, which had led to heavy discounting to maintain sales growth.
Shoppers were also becoming more hesitant to spend money due to low wage growth, weak consumer confidence and rising living costs.
“Myer’s strategy had shown signs of working, but sales growth waned in 3Q17,” Mr Simotas said.
“As the industry is becoming more competitive, Myer’s new offer may not be resonating strongly enough with consumers.
“Myer’s efforts to reduce discounting seem sensible, but we believe it will come at the expense of sales, particularly given other retailers are discounting aggressively,” he said.