Myer fears closures after crippling loss
MYER says it will not rule out store closures in the future as “prison-style” lockdown measures in Victoria fuel an ongoing slump in store sales.
And the company’s biggest shareholder, retail billionaire Solomon Lew, has resumed his bitter public campaign against the department store by calling for the resignation of its board and for an urgent management overhaul following its $172.5m loss.
Mr Lew has attacked Myer’s board before but now, for the first time, he has turned his corporate guns on CEO John King, demanding he follow the board out the door.
“Today’s results are disastrous and shameful,” Mr Lew said in a statement through his ASX-listed Premier Investments.
“Two years into John King’s tenure – it’s clear the Myer turnaround is in tatters. It’s now time for the CEO to follow the board through the exit.”
Retail shutdowns from the coronavirus pandemic have caused a massive financial rupture for the iconic department store with its sales for the 2020 financial year nosediving more than 15 per cent.
Mr King said the decision to close all of its 60 stores over April and May due to the pandemic – resulting in 10,000 staff members being stood down – had been one of the toughest decisions ever made by the company.
The major department store retailer has suffered a statutory loss of $172.4m for the 2020 financial year, a stark difference to the net profit of $24.5m reported in the previous corresponding period.
Myer chief financial officer Nigel Chadwick said Victoria’s extended lockdown had caused physical store sales in the state to be down by roughly 90 per cent.
“We didn’t expect last Sunday to be put under full prison-style lockdown for another several weeks,” he said.
Mr King told investment analysts yesterday that each time Premier Daniel Andrews announced new COVID-19 cases, consumer confidence “takes a whack”.
He also noted Myer was considering whether it would renew leases with landlords for some of its department stores.
“For the majority of the second half, there was substantially reduced traffic to physical stores, particularly to those located in CBD locations,” the company said in its results. “Myer’s CBD stores represent some of its largest stores with high associated rents and staffing requirements, and therefore the impact on profit as a result of the reduced revenues was exaggerated.”
Total sales for the 12 months ending June 30 were down 15.8 per cent compared with the previous year to $2.5bn. Myer’s statutory earnings were $78.5m.
Mr King said while store sales had been affected by the shutdown, online sales experienced significant growth, with the major department store in August announcing further agreements with Australia Post and Amazon to support digital sales.
Myer shares closed 17.6 per cent lower at 21c.