Myer blames huge loss on dud moves
MYER’S executive chairman has criticised poor decisions and competition “failures” under former chief executive Richard Umbers’ leadership after the department store slumped to a $476.2 million half-year loss.
Garry Hounsell, who was appointed chairman five months ago and then executive chairman in February after Mr Umbers was ousted, said the first half was blighted by poor strategy and rushed changes, including a failure to fight aggressive competition in the lead-up to Christmas.
“In addition, the execution of strategic initiatives could have been better managed,” he said.
Mr Hounsell, previously a strong advocate of Mr Umbers’ “New Myer” strategy, which included store closures, brand overhauls and a focus on big-spending, fashion-forward professional women, made no mention of the strategy’s name on Wednesday.
“Some elements of the strategy which targeted a new high-value customer were rolled out too quickly and didn’t balance enough attention on Myer’s traditional customer base, which adversely impacted profitability,” Mr Hounsell said.
He said he had been “driving the management team to trade the business more aggressively”.
The temporary Myer head – who is still searching for a new CEO – wants to shift focus back to Myer’s traditional customer, prompting an analyst to question whether the “traditional” Myer shopper even existed any more in a market splintered by online shopping and aggressive international such as Zara.
Mr Hounsell said the company’s database showed there were still traditional customers who wanted to shop at a big department store.
He said he had shifted focus back to product, price and customer service, including a focus on Myer’s private labels and exclusive brands. Myer is also seeking to further cut costs and is in discussions with landlords on lease costs and tenure.
Myer’s near-half-billion dollar loss was driven by a $515.3 million impairment of retailers goodwill and brand names but trading conditions remain challenging, with key like-for-like sales dropping three per cent for the six months to January 27.
Pre-impairment profit for the 26 weeks to January 27 fell 36.1 per cent to $40.1 million, which is in the upper end of guidance given in February. Myer also suspended its interim dividend and after rising in early trade its shares finished down 1.5¢ at 41.5¢.
UBS analysts said the profit, excluding impairments, was better than the market had expected.