Department store chain, Myer, is cautious about the year ahead as it faces increased costs and a challenging economic and consumer environment.
Chairman Paul McClintock said that while sales in the first quarter reflected a modest improvement in consumer sentiment following the September election, the challenging retail and economic environment continued.
“We … remain cautious about the year ahead given the challenges of the economic outlook and consumer confidence,” McClintock told the company’s annual general meting in Melbourne on Wednesday.
He said the business would be affected by major refurbishments and face increased operating costs in full year 2014.
“As we move into full year 2015, we expect to benefit from improved operating leverage and stronger fundamentals as a result of the completion of major refurbishments, the online business becoming profitable, and the ongoing optimisation of our store network,” he said.
During fiscal 2014, three of Myer’s top 20 stores will be refurbished.
McClintock said Australia was relatively well-positioned compared to Europe and the United States in terms of the economic and consumer outlook.
However, “the retail sector would clearly benefit from reform to help drive productivity and mitigate increasing costs to enable us to become more competitive in a global marketplace,” he added.
McClintock also took aim at the GST exemption for online overseas retailers saying it continued to affect a retail industry already dealing with rising employment and utilities costs.
“The loophole for overseas retailers reflects thinking from a time before the advent and growth of online retail which is now measured in the billions of dollars,” he said.
The board has appointed executive recruitment firm Egon Zehnder to conduct an international search for a replacement for CEO Bernie Brookes who is due to step down next August.
The company plans to provide an update to the market on the succession plan by the half year results in March 2014.
“The board is focused on ensuring that there is an appropriate succession plan in place for Bernie when the time comes and we are confident that the best possible person will be appointed to lead the business to further success in the future,” he said.
Over the past year, Myer said, it had undertaken more than 130 audits of direct supplier factories as part of its ethical sourcing of garments.
AAP
