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Myer to shut three stores on slow sales

Simone Ziaziaris  |  14 Sep 2017Text size  Decrease  Increase  |  

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Myer (ASX: MYR) says it will close a further three stores as it struggles to turn around sluggish sales amid weak consumer spending and growing industry competition.

The department store giant on Thursday said it would not renew leases at Colonnades in South Australia, Belconnen in the ACT, and Hornsby in Sydney's north, as it announced a 1.9 per cent drop in underlying profit to $67.9 million and a 2.67 per cent fall in total sales to $3.2 billion for the year.

The retailer made just $11.94 million in statutory net profit for the 52 weeks to July 29, down 80.3 per cent on the previous 53-week year, blaming a $13.9 million cost hit and significant items of $42.1 million.

Chief executive Richard Umbers said he could not confirm the exit dates of the three stores, but said conversations around lease agreements were taking place, with leases in Hornsby and Belconnen due to expire in 2019 while Colonnades' lease will end in 2020.

The company last September announced it would close its store in Logan, Queensland, in 2018.

Myer is in its second year of a five-year $600 million turnaround plan which involves giving more space to popular brands while cutting back its own private labels.

Since the September 2015 launch of its strategy, dubbed New Myer, the company has closed or announced the closure of 74,670 square metres of store space overall.

Sales for the 2017 financial year were impacted by the earlier closure of three stores, Brookside in Brisbane and Orange and Wollongong in NSW, the write-off in the value of its 20 per cent stake in Topshop's Australian franchisee and the impairment of $38.8 million against the carrying value of its struggling sass & bide brand.

Performance of sass & bide had been below expectations during the period, with full-year sales $10.9 million below the prior year.

Mr Umbers said Myer had seen a subdued start in the first six weeks of the 2018 financial year.

He said new market entrants were expected to hit sales, along with existing competitors, changes to consumer demographics and increased online competition.

Myer said it would remain focused on a more innovative and "experiential" retail offerings, including services, food and new clearance floors to mitigate the risks.

"We know that the next wave of changes are coming … and Myer will be ready," Mr Umbers told investors.

The results failed to dampen investor spirits, however, with the company's share price up 2.5 cents, or 3.47 per cent, to 74.5 cents at 1115 AEST.

MYER'S STRUGGLE TO OVERCOME SLOW SPENDING:

* Underlying Net profit down 1,9pct to $67.9m

* Statutory net profit down 80.3pct to $11.94m

* Total sales down 2.67 per cent to $3.2bn

* Fully franked final dividend of two cps, down 1 cps, taking the full-year payout to 5 cps, unchanged

 

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