Plummeting sales and writedowns on fashion brands have forced retail giant Myer to close more stores and introduce lean marketing initiatives in a bid to remain competitive, following the announcement on Thursday that the company’s net profit was down 80 per cent.
Myer Chief Executive Officer and Managing Director, Richard Umbers said on Thursday that total sales were 1.4 per cent lower than previous years, reflecting the closure of three stores – Orange and Wollongong in NSW and Brookside in Brisbane – while comparable sales were down 0.2 per cent.
Myer announced a net profit of $11.9 million for the financial year ending 29 July, 2017, which is the company’s weakest result since its sharemarket float in 2009. As a result Myer has announced it will not be renewing leases at Colonnades in Adelaide, Belconnen in Canberra and Hornsby in North Sydney.
The writedown value of Myer’s 20 per cent stake in Topshop of $6.8 million and a $38.8 million impairment charge against the carrying value of Sass & Bide – which recorded sales $10.9 million below last year – have contributed to the company’s dismal financial results.
“We are obviously disappointed to have not reached our target of exceeding last year’s (net profit after tax) of $69.4 million and that progress against our metrics that matter is slower than we anticipated,” Mr Umbers said.
“However Myer has become a leaner, more productive and efficient retailer, better placed to compete in a rapidly changing environment.”
While sales in the first six weeks of the new financial year were below expectations, Myer “anticipates continuing changes to both consumer behaviour and the broader competitive environment.”
The company said the ‘New Myer’ agenda would prioritise investments to deliver further improvements, which is expected to “best position Myer to deliver continued sustainable profit in an unpredictable environment.”
“We have made significant progress to deliver New Myer which has assisted the company to withstand the challenging retail trading conditions characterised by heightened competition, subdued consumer sentiment and discount fatigue,” Mr Umbers said.
Myer shares were down 4 per cent to AUD 70 cents at close of trade on 15th September, 2017.