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Myer profit slips as turnaround continues

Richard Umbers, MyerDepartment store Myer’s half year profit was down 4 per cent, as the company undertakes it $600 million, five-year turnaround.

For the 26 weeks ending January 23, net profit fell to $59.7 million. During the period, sales rose 1.8 per cent to $1.79 billion, with comparable store sales up 3.3 per cent.

Myer has tightened its full year guidance, forecasting a profit between $66 million and $72 million, compared to its previous forecast of $64 to $72 million.

Myer CEO, Richard Umbers, said the department store enjoyed solid trading over Christmas and the stocktake sale period.

“Only months into the first year of our five year strategy, we are pleased with the early progress and positive customer response to initiatives delivered under the New Myer strategy, particularly in our flagship and premium stores,” Umbers said.

“Our first wave of initiatives to deliver wanted brands, enhanced customer service and an improved omnichannel experience have helped deliver comparable store sales growth of 7.1 per cent across 12 Victorian and New South Wales flagship and premium stores. This is a very encouraging result. We have a significant pipeline of further improvements and the team has a strong focus on execution,” Umbers said.

The company will pay an interim dividend of two cents per share.

Myer is focussing on high profile brands and will reduce its store network by up to 20 per cent to focus on its flagship stores.

Its Top Ryde City store in Sydney has already gone, and Myer announced last week it will close Brisbane’s Brookside shopping centre store in January 2017.

Revenue from the online business grew over the half, which included opening a Myer store on the eBay marketplace.

“The online business delivered strong revenue growth of 70 per cent on the prior year with the growth in profitability exceeding sales growth,” Umbers said. “This impressive performance results from our focus to deliver an improved omnichannel experience including an expansion of the in-store iPad service, strong take up of click and collect and upgrades to the site.”

Umbers also attributed the sales lift to an investment in customer service.

“Myer has invested to lift customer service, by prioritising our flagship and premium stores, leading to well above-average sales growth and a significant improvement in our net promoter scores.

“Store management have led a program of low cost, high impact, targeted upgrades to their stores including improved visual merchandising, lighting, fitting rooms and other works.

“Myer has prioritised the allocation of team member hours to the busiest trading periods, taking advantage of the introduction of more flexible rostering,” he said.

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