Department store owner Myer has issued a trading update with JB Hi also set to report their last quarter results this week.
The department store management warned of inflationary pressures through the economy and greater reliance on promotions and discounts to generate revenue and shift slow moving stock.
Myer said it expects a net profit of between $49m and $53m for the six months to January 27, the forecast includes the cost of store closures, and the impact of inflationary cost pressures on sales.
The forecast is well down on the interim profit of $65m Myer posted in 2023, which was at the time its highest interim profit since 2014.
Currently Myer is looking for a new CEO, after management missed out on hiring veteran retailer Mark McInnes as outgoing CEO John King’s successor.
Pressure is mounting on the Myer board led by new chairman Ari Mervis to recruit a chief executive ASAP as retail comes under pressure on several fronts.
John King’s is planning to exit the company in early June.
The Australian reports that former Myer chairwoman JoAnne Stephenson, who was succeeded by Mr Mervis after the November AGM, said at the time the board was well-advanced in the search for Mr King’s replacement, with “interesting candidates both locally and internationally.”
Shares in Myer rallied 10 per cent on the release of the trading update which although showed a fall in sales and profits for the December half was not as bad as some investors had feared given the poor trading conditions for many retailers currently.
Myer, whose largest shareholder is retail billionaire Solomon Lew, said it expected sales for the half to be down 3 per cent to $1.829bn but 13.8 per cent higher than pre-Covid-19 levels.
Online sales for the December half are expected to be $390.1m, an increase of 2 per cent and representing 21.3 per cent of total sales.
Total group inventory is expected to be lower than the same time last year, reflecting the continuing focus on newness and controlling intake to match trading conditions.
King said there was a heavier reliance on promotions in the market, which was hitting profitability.
“To match our best first half sales result on record, on a comparable sales basis, is an encouraging result given the current economic environment,” he said.
“Like many retailers, we have had to contend with inflationary pressures and greater promotional cadence, which has had an impact on profits.
“We expect the consumer to remain cautious in the second half of fiscal 2024 but believe we remain well positioned with the strength of our leading loyalty program, our national distribution centre starting to scale and the continued rollout of successful brand extensions and new additions.”
