Myer has downgraded its full year profit guidance to between $75 million and $80 million, well below analysts expectations of a $90 million profit and last year’s $98.5 million result.
The downgrade coincided with the troubled retailer reporting a profit of $62.2 million for the six months to January 24, down from $80.8 million.
The profit slide came amid weaker than expected sales and an increase in costs linked to refurbishments and other investments.
New CEO, Richard Umbers, who ascended to the top job earlier this month after the departure of long serving CEO Bernie Brookes, admitted Myer had lost relevance with customers.
He said the company would overhaul its operations to win back customers.
“Some elements of the existing strategy represent solid retail fundamentals,” he said.
“However, overall it did not deliver a business model able to respond to this new retail environment and we have lost relevance with some customers.”
The company is carrying out a strategic review of its business, which some analysts say could result in store closures.
Total sales rose 1.5 per cent to $1.76 billion during the first half, while the cash cost of doing business was up 6.2 per cent to $570 million.
“We acknowledge that in recent years, cost growth has outpaced sales growth, and profits have declined,” Umbers said.
Myer expects to lift total sales between three and four per cent during the second half but expects profit margins to fall between 15 and 30 percentage points.
The company cut its interim dividend by two cents per share to nine cents per share, fully franked.