This article is from the Australian Property Journal archive
TOUGH retail conditions and the write off of its investment in Topshop have forced Myer to downgrade its underlying earnings for the 2017 financial year.
It announced yesterday that its full-year NPAT would be between $66 million and $70 million, having initially declared it would be higher than 2016’s $69.3 million.
The lower outlook saw Myer’s share price fall yesterday to a new 52-week low of 72.2 cents before recovering to close at 73.5 cents, down 9.82% – a far cry from its 52-week high price of $1.46.
Myer also confirmed it wrote off its 20% stake in failed fashion import Topshop & Topman of $6.8 million, and that it had ended concessions for the retailer in Myer after it could not secure a deal with UK-based brand owner Arcadia group.
Myer bought a 25% stake in Austradia in September 2015 for an undisclosed sum as part of a wider $600 million strategy to shake up its fashion offering and address the department store’s falling profits.
Although Myer did not disclose how much it paid, Australian Property Journal had revealed in May that Myer forked out $9.8 million for the 25% stake. As at July 30 2016, the value of its investment had decreased to $9.2 million and as at January 28 2017, it declined further to $7.2 million and its stake diluted to 20%.
Topshop has closed five of its nine standalone stores nationwide since going into administration in late May. These were headlined by the closure of the Chapel Street site in South Yarra, which was the first outlet for the label in Australia in 2011.
Also closed are the Chatswood and Miranda shopping centre stores in New South Wales, Perth and at Highpoint shopping centre in Melbourne.
Myer will also take a $38.8 million hit from the continued soft performance of its sass & bide retail chain.
It will look to enhance the experimental aspect of its offering to combat the challenging environment.
“The period of the June – July Stocktake sale has traditionally been an important period of profit generation for Myer. This year we have executed a number of new initiatives to engage our customers, drive foot traffic to our stores and increase average transaction value,” chief executive officer and managing director, Richard Umbers said.
“These initiatives have delivered positive results and have provided some mitigation against volatile and challenging trading conditions,” he said.
“We are responding to the challenging external environment in a way that preserves the integrity of the New Myer strategy that is built around customer service, engaging retail experiences and wanted brands, while continuing our focus on efficiency and productivity.”
UK department store Debenhams is set to open its 4,000 sqm flagship site in St Collins Lane in the Melbourne CBD in September, whilst the pending arrival of Amazon is expected to have wide repercussions for the retail market.
Retail landlords will continue to face uncertainty in an environment that has notably claimed high profile fashion labels this year alonein Rhodes & Beckett, David Lawrence, Marcs and Herringbone.
Swedish fast fashion giant H&M has looked to shirk the difficult climate, recently announcing the opening of two new stores Toowoomba and Rockhampton.
Australian Property Journal
