Myer back in black but sales slide

MYER chief executive John King says the department store chain has “steadied the ship” and is well placed to fill the void left by a number of fashion brands being pulled from its shelves.

Shares in Myer jumped by more than 10 per cent yesterday as it announced it had returned to profit, moved away from constant discounting and lifted sales of its higher margin own label brands.

“We’ve steadied the ship,” Mr King said yesterday.

“A lot has been done but there is loads to do. There is no doubt that we are on the right path with the right plan and the right people in place to execute it.”

Net profit came in at $38.4 million for the 26 weeks to January 26, Myer reported yesterday. That is a turnaround from a $476.2 million loss Myer posted in the same period a year earlier when it was hit with major writedowns to the value of its brand.

The result takes in the crucial Christmas trading period and comes as Myer fends off attempts by its biggest shareholder, billionaire Solomon Lew, to overthrow the board.

Total sales fell 2.8 per cent to $1.67 billion but sales of Myer exclusive brands – those it owns or which can only be bought there – rose 3.7 per cent.

Myer’s gross profit margin improved by 99 basis points while it also announced it had trimmed its net debt by $57 million.

Mr King said the focus going forward would be on reducing store space, driving more exclusive brand sales, improving its online offer and logistics and lowering costs.

Store closures remained a possibility but negotiations with landlords to hand back space were bearing fruit, he said. All stores bar one were profitable during the half.

“Reducing space continues to be a massive priority for us,” Mr King said. “Every store is under the lens at the moment.”

Myer and David Jones are increasingly moving to tie up exclusive product offers.

South Africa’s Woolworths Holdings, which owns David Jones, announced last year it was pulling its Country Road, Politix and Mimco fashion labels from Myer and had tied up exclusive deals with labels including Scotch & Soda and Nautica.

Mr King said Myer was rolling out 20 new brands including Twisted Tailor from London, Acqua di Parma from Italy and Girls on Film and Little Mistress from the UK.

Another 80 labels were set to follow.

“These are brands that are sold here but from their home country,” he said. “Some will work, some will not so we will see – it normally takes three seasons to establish a brand.”

Myer did not pay a dividend.

Shares in the retailer gained 11 per cent yesterday to close at 46c.