Myer shares have plunged to an all-time low after the announcement.
The department store giant said total sales in the first two weeks of December were down five per cent on the prior corresponding period on top of a first-quarter sales’ decline of 2.8 per cent.
Myer said it now expects the first half of the 2018 financial year to be “materially below” the previous corresponding period’s $62.8 million net profit.
Shares in Myer were down 7.2 per cent to 67.25 cents at 1103 AEDT.
Myer’s Q1 FY2018 sales were announced on 1 November 2017, with total sales down 2.8 per cent and comparable store sales down 2.1 per cent, compared to the previous corresponding period.
At the company’s AGM on 24 November 2017, Myer said it had earlier indicated trading at the start of the all-important second quarter had shown no improvement on the first quarter.
“Since the AGM sales have continued to be below expectations and reflect ongoing challenging retail conditions characterised by reduced foot traffic, widespread industry discounting and subdued consumer sentiment,” the retailer said in a statement.
“Despite investing heavily in marketing and traffic-driving initiatives, total sales to the end of November were down 2.3 per cent and down 1.8 per cent on a comparable store sales basis.
Sales during the first two weeks in December have weakened further and were down 5 per cent on the previous corresponding period.
“Trading during the past two weeks has been significantly below our expectations and the year to date run rate, and while there is an additional weekend of pre-Christmas trading this month, we do not know what the sales impact of that will be,” Myer chief executive officer Richard Umbers said.
“There has been continued strong performance in our online business with sales up 62 per cent in the first four months despite cycling a particularly strong previous corresponding period in the lead up to Christmas 2016.
While this strong growth has not been sufficient to offset the subdued trading in some stores, we take confidence from this performance as indicating that we are investing in the right areas,” Umbers said.
New Myer chairman Garry Hounsell said the retailer would further its focus on omnichannel and productivity as priorities.
“As I said at the AGM, I am an impatient person and I am driving the executive team to unlock value more quickly,” he said.
“During the next 12 weeks, I will be continuing my incoming chairman’s review of all aspects of the business including Myer one, omnichannel, merchandise, marketing, customer service, property and a cost review to commence immediately.”
Myer expects “a significant proportion” of its annual net profit after tax will be generated during the second quarter.
“Given the recent sales volatility and considering the magnitude of sales expected in the coming weeks, Myer does not have a reasonable basis to provide a specific profit range for the half or full year at this time.”
Myer’s major shareholder, Premier Investments, wasted no time in commenting on the latest announcement.
“At Premier’s AGM on 1 December 2017, the chairman, Mr Solomon Lew, warned Myer’s board of directors: ‘Summer is coming…The numbers won’t lie.’ Clearly there is worse to come,” said a spokesperson.
Premier Investments chairman Solomon Lew failed in his bid to vote down the election of Hounsell as Myer’s chairman at the department store’s AGM last month.
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