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Myer Profit Tumbles 80%, Worst Result Since Float

Department store retailer Myer has released its earnings report, revealing net profit tumbled 80.3% on last year. The retailer posted a threadbare net profit of $11.9 million (inclusive of impairment and restructuring costs), which is the worst earnings report since the group floated in 2009.

The disappointing results come amidst a challenging retail environment which faces extensive disruption from technology and e-commerce, whilst consumers shift their preferences away from traditional brick and mortar offerings.

Richard Umbers, Myer’s Chief Executive, has expressed his disappointment with the full year profit results, which fell short of the company’s guidance. It did, however, come in with market expectations.

Mr Umbers had formerly pursued a $600 million turnaround strategy for the retailer, though Myer has fallen short of almost every financial target since.

In July, Mr Umbers confirmed he has abandoned a long-term sales growth target of 3%. His target to increase sales by 20% per square metre was notably ambitious.

The retailer’s underlying result before one-off costs dropped 1.9% to $67.9 million, which was below Myer’s forecast of between $66 million and $70 million.

Analysts expect lower profits this year.

Cheif Executive, Mr Umbers has been praised for making some headway in improving online sales and reducing costs, though it has not been enough to cover the retailer’s declining sales and prevent store closures. Umbers states he is making strong progress on his “New Myer” strategy, though the market hasn’t taken to it as much, despite a promising start.

The company has also winded back its discounting strategy which it received heat for under the former management.

Like for like sales declined 0.2%.

Myer’s margins improved 54 basis points to 31.85%, notably higher than Citi’s forecast for gross margins to drop 41 basis points to 38.3%.

The retailer’s online sales also increased but were not sufficient to make a large enough impact on the overall result.

As Myer has expanded its fulfilment chain, omni-channel sales jumped 41.1%. Online sales now represent 8% of all sales.

Myer has accelerated downsizing and the number of store closures, overall losing a total of 7.5 hectares of space in the past two years.

The company will pay a full-year dividend of 5 cents a share, which is the same as last year, but slightly lower than expectations.

Mr Umbers has not given much away concerning the outlook for the current year, though states he is aiming to beat market consensus of a $66 million profit this year.

For the consumer electronics sector, home entertainment sales were one of Myer’s most notable sales categories, with online sales within this division jumping 45% and comprising 26%.

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