Myer To Scale Back With Store Closures?
The Sydney Morning Herald has reported that Myer’s four-year-old Top Ryde City shopping centre store in Sydney could be the first of as many as 20 stores slated for closure, with Myer to exit as part of a refurbishment of the centre.
According to a development application lodged in March with the City of Ryde Council, Top Ryde City plans to replace the store, the SMH reported.
“We’re aware the plans for the refurbishment of the centre are progressing and we’ll continue to work with the landlord on any proposed changes at the centre,” a Myer spokeswoman told the SMH.
Myer has been the subject of plenty of media attention in recent times.
Upon release of its 2015 half-year results in March, Myer issued a downgrade of its full-year profit expectations, stating it expected full-year net profit after tax of $75-80 million (excluding one-off costs), down from the $98.5 million posted in 2014, with questions subsequently raised as to why it hadn’t issued the news at an earlier date.
Earlier in March, Myer had announced its CEO succession and provided an update on its strategic review, however had not disclosed information about its profit expectations. Myer subsequently stated the revised forecast was completed at a later date on March 18.
Meanwhile, The Australian last month reported there is speculation that businessman Solomon Lew is planning a takeover bid for the chain.
While Myer was at one time focused on expanding its geographic reach, it appears its strategy will now fundamentally change.
With Myer having closed six stores over the last three years where its leases have expired, the SMH has reported analysts and investors believe it may need to close another seven to 20 existing stores, which would result in a reduction of its store network to between 48 and 60 stores, losing more than $100 million in annual sales.
“They have some stores that they don’t want and some stores that are too big with dead floors,” the SMH reported a fund manager as stating. “I estimate they have 10 to 20 per cent too much space.”
Myer expects competition to remain strong in the 2015 second half.
“During the second half, sales will be supported by two new stores and four completed refurbishments, as well as continued growth in online sales,” Myer stated upon release of its 2015 first-half results.
“However, the heightened competitive environment experienced in the first seven weeks in the half is expected to continue.”
Myer has been undertaking a strategic review of its strategy, which is continuing under new chief executive officer Richard Umbers.
“We acknowledge that in recent years, cost growth has outpaced sales growth, and profits have declined,” Umbers stated upon release of the 2015 first-half results. “At a macro level, the challenges are well known, particularly the globalisation of retail, which has brought new competitors to our shores.
“Digitisation has both empowered the consumer and created new channels to market. Customers have changed the way they shop and their expectations of retailers have changed significantly.
“Some elements of the existing strategy represent solid retail fundamentals. However, overall it did not deliver a business model able to respond to this new retail environment and we have lost relevance with some customers.”
Myer is set to release more details about its strategic review later in the year.