This article is from the Australian Property Journal archive
DEPARTMENT store Myer has posted a fall in total sales of 3.3% for the March quarter due to tough retail trading conditions and it is facing fresh competition from global giants TK Maxx and Amazon.
Quarterly sales were at $653.0 million, and down 2.0% on a comparable store basis. Year-to-date sales were down 1.3% to $2.438 billion, and 0.3% on a comparable store basis.
Online trading conditions continued their strength, up 36% year-to-date.
Sales per sqm on a rolling 12-month basis are up 5.1% compared to July 2015.
Myer chief executive officer and managing director Richard Umbers said the group’s sales result for the quarter reflected challenging trading conditions, which were compounded by severe weather impacts in Queensland and northern New South Wales associated with Cyclone Debbie.
Umbers said the ongoing soft performance of its women’s luxury retailer Sass & Bide responsible for $1.5 million of the group’s shortfall in total sales over the quarter.
He added that he was confident the long-term benefits of a more productive network would outweigh the short-term sales impact of store closures at Brookside and Orange at the start of the third quarter and Wollongong in October 2016.
“Myer has delivered total and comparable store sales growth in five of the past seven quarters. While sales growth is integral to the New Myer journey, at this time we are focused on higher quality sales to maximize profitability,” he said.
The group acquired the Marcs and David Lawrence brands over the quarter.
However Umber shrugged off the entry of US giants TK Maxx and Amazon, the latter expected next year.
Global sports goods and clothing retailer Decathlon earlier this week announced its maiden Australian flagship outlet in Sydney’s Tempe, and plans for 100 stores nationwide following the launch of its Australia-focused website last year. Decathlon’s entry comes as US giant TJX Companies opens 35 stores under its TK Maxx brand.
But the major disruption in the retail sector is anticipated from the bricks-and-mortar introduction of behemoth Amazon, which has already hired 1,000 people ahead of its debut down under.
“There’s a new kid on the block and he’s a big kid. What isn’t clear yet is the nature of their offer here, the timing, the extent of their business distribution. So I think it’s a fairly bold leap to make some of the conclusions that have been made in the marketplace.
“There is a vacuum of information about these new players and in the absence of hard, solid facts people draw conclusions on what the impact is going to be,” Umbers told reporters.
Citi analyst Bryan Raymond said he remained cautious about Myer’s sales outlook.
“Whilst retail conditions are unlikely to improve markedly near term, we are confident that management can manage profitability through efficiency gains and cost containment,” Raymond said.
Myer’s is not alone in recording a sales slump, Westfield earlier this week announced flagship specialty sales moderated to 3.3% over 12 months, a drop from 6.3% growth a year ago.
Australian Property Journal
