Myer expected to unveil weak FY sales

Petrina Berry | 13 Sep 2017

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BRISBANE - [AAP] Myer's (ASX: MYR) struggle to overcome sluggish consumer spending will be back under the spotlight on Thursday, with the department store giant expected to confirm a fall in sales amid its full-year results.

Fierce rival David Jones last month called out falling consumer confidence as a major factor behind a 0.7 per cent fall in full-year comparable sales, and Myer looks set to suffer too.

Chief executive Richard Umbers has been trying to turnaround the business for two years but Myer already warned in May that "challenging trading conditions" would continue to hurt sales.

The retailer reported a 3.3 per cent fall in its third quarter sales in May with comparable sales down 2 per cent.

Citi analyst Bryan Raymond wrote in a note that the second half was tough for David Jones and that Myer would likely have had a weaker performance.

"David Jones and Myer's stores and customers overlap in many parts of Australia," Mr Raymond said last month.

Citi has forecast Myer's comparable store sales to drop 2.8 per cent and for earnings before tax and interest to have slipped in the second half of the 2017 financial year.

Mr Raymond said the second-half results will highlight the challenging conditions Myer has faced, particularly as Mr Umbers tries to cut back on discounting.

Myer announced in July that it will take a total $45.6 million hit after writing off the value of its 20 per cent stake in Topshop's Australian franchisee and impairing the value of its struggling sass & bide brand.

The retailer had previously expected net profit to exceed 2016's $60.5 million but the writedowns and another $20 million of costs are expected to weigh.

The company expects underlying net profit to be in the range of $66 million to $70 million.

Myer has shed many of its private labels and brought in more popular brands as concession stalls--outlets inside the department store--in the past year as part of its turnaround strategy.

The higher mix of concession stalls, with a focus on popular brands, including John Lewis and Veronica Maine, has reduced Myer's operational costs.

Myer shares have halved in value over the past year and were trading at 71.5 cents at 1325 AEST on Wednesday.

 

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