Myer has issued a profit warning to its shareholders, following further declines in sales – notably just two weeks before Christmas.
The department store retailer has confirmed the suspicions of many market commentators, admitting that this Christmas will likely offer sluggish sales.
The news comes as online shopping in Austalia continues to burgeon, and notably follows the launch of Amazon Australia last week.
Earlier today, Myer’s share price plunged 12% to a record low of 63.5c.
This is the second profit warning the retailer has issued this year.
The retailer claims that despite heavy investment in marketing, total sales in November slipped 2.3%, and fell 1.8% on a comparable store sales basis.
Myer CEO Richard Umber has informed investors that sales during the first two weeks of December have further weakened, and are 5% lower than the previous corresponding period:
“Trading during the past two weeks has been significantly below our expectations and the year to date run rate, and while there is an additional weekend of pre-Christmas trading this month, we do not know what the sales impact of that will be”.
“Given the recent sales volatility and considering the magnitude of sales expected in the coming weeks, Myer does not have a reasonable basis to provide a specific profit range for the half or full year at this time”.
Mr Umbers claims that online sales have increased, however, has not been enough to offset subdued store performance:
“There has been continued strong performance in our online business with sales up 62 per cent in the first four months despite cycling a particularly strong previous corresponding period in the lead up to Christmas 2016″
“While this strong growth has not been sufficient to offset the subdued trading in some stores, we take confidence from this performance as indicating that we are investing in the right areas”.
Myer Chairman, Garry Hounsell, affirms that the retailer is taking rapid action to lift performance:
“As I said at the AGM, I am an impatient person and I am driving the executive team to unlock value more quickly.
“During the next 12 weeks, I will be continuing my incoming chairman’s review of all aspects of the business including MYER one, omni-channel, merchandise, marketing, customer service, property and a cost review to commence immediately”.
The news is likely to infuriate notable shareholder, Solomon Lew, following his recent aggressive campaign against Myer and its management.
