y Myer stores. Richard Umbers, Myer CEO, said a review of sales data by the retailer had indicated that the majority of its customers were shopping at stores at Parramatta, Chatswood, Macquarie Centre and Sydney City. “After careful assessment, the decision has been made to close the Myer Top Ryde store in late July 2015,” Umbers said. “The opportunity to exit at this time has been facilitated by plans underway to redevelop the centre.” After Myer floated on the Australian Stock Exchange in 2009, the retailer embarked on a major store expansion program in a bid to boost market share and lift sales. The retailer planned to open 15 stores over five years between 2010 and this calendar year, but the store development program lost momentum with some shopping centre expansion projects slowed in the wake of the global financial crisis. When it went public, Myer had 65 stores and the plans were to establish a network of 80 stores nationally. However, in the past three years, Myer has closed Elizabeth in South Australia, Dandenong and Forest Hill in Victoria, Fremantle in West Australia and Hurstville and Tuggeranong in NSW. It has shelved planned new stores at Woden Plaza in the ACT, Green Hills in NSW and Plenty Valley in Victoria, and it is understood that a proposed 2017 opening for a store at Casuarina Square in Darwin is now also in doubt. While the Top Ryde exit was effectively already public knowledge, Myer is still mulling over further store closures for locations that are unprofitable; stores that require capital investment to upgrade them; as well as stores with overlapping catchments that have duplicate costs and cannibalise sales. Despite adding new retail floorspace each year and substantial upgrades of flagship and premium stores, Myer’s sales have shown no real growth and, in some reporting periods, have fallen along with market share. The retailer is now expected to reduce its store network by at least another six– and possibly closer to 20 – stores as leases come up for renewal, or through exits negotiated with landlords, a streamlining program that could cost as much as $300 million in store closure costs. Standalone store trial falls flat Confirming the Top Ryde exit, Umbers did not comment on any further stores marked for closure in the immediate future, but noted that the retailer has undertaken an extensive analysis of Myer’s, “current and future customer base, on a catchment by catchment basis that now informs our decision making”. Umbers said that while the everyday focus remains on running the business, work to conclude the strategic review of all operational areas continues, including an assessment of the productivity of all assets. Umbers said Myer will also close three standalone speciality stores trialled at Epping Plaza inMelbourne’s northern suburbs growth corridor.The stores stocked Myer Exclusive Brands in womenswear, menswear, and childrenswear and were part of a growth strategy developed under FSS Retail, a business entity registerd by Myer to explore opportunities in specialty stores. ‘FSS’ is understood to be shorthand for Free Standing Stores Retail and was potentially a vehicle for new retail brands as well as for acquisitions of specialty chains following Myer’s purchase of Sass & Bide. Umbers said significant insights had been gained from the trial of the standalone stores but the decision had been made to close those stores at the end of August and to focus on the core Myer business in bricks and mortar and online. He said the retailer was, however, still examining other formats and store sizes as part of its ongoing strategic review. Umbers said retailing is about innovation and the retailer should always be testing new ideas and formats. “The focus remains on building relevance with customers, to deliver a more sustainable and more profitable business into the long term. A strategy update will be provided in due course.” Myer’s head office staff cuts have included Marianne Jones, digital general manager, and John Strickland, national visual merchandising manager, among the 80 positions declared redundant. Most of the positions declared redundant were in middle management ranks in the IT, marketing and buying departments. There is around 1000 staff in the Myer head office and the job cuts follow a revamp of support office structure. Umbers’ review follows Brookes’ review Umbers’ current strategic review follows a previous review undertaken by former CEO, Bernie Brookes, after Myer was jilted by David Jones on a merger proposal mooted in October 2013 at a time when David Jones was in turmoil. South African retailer, Woolworths, acquired David Jones in mid-2014, leaving Myer to look for alternate business strategies to boost flagging sales and earnings and to arrest declining market share. Myer has never recovered the $4.10 share price that it launched with in a $2.3 billion float in November 2009, in large part because sales growth has eluded the retailer despite a growing online sales platform, a beefed up loyalty program and both new store development and refurbishments of premium stores. As occupancy and staffing costs have increased and the falling Australian dollar has lifted inventory costs, Myer profits have fallen well short of forecasts. Myer sales have actually fallen by around four per cent since its share market listing in 2009 and retail margins have fallen from around 8.25 per cent to 5.1 per cent over the same period. Myer downgraded profit forecasts for the current financial year by around 24 per cent, however, earnings may well be further reduced by costs associated with restructuring as a result of the current strategic review. One key area that is expected to be developed further and to potentially require more capital investment is the online sales platform, which hasprovided consistent growth over the past five years. Umbers, who replaced Brookes as CEO in March, is expected to provide details of the strategic review outcomes ahead of the announcement of fourth quarter and full year sales and earnings. Myer has already been criticised for its failure to alert the market to the 24 per cent profit downgrade at an earlier stage, with disgruntled shareholders launching legal action against the retailer over the issue. Umbers walked into the controversy days after his appointment as CEO and after just six months working at Myer with responsibility for financial services, supply chain and the Myer One loyalty program. Umbers believes Myer needs to be more nimble if it is to fend off international competitors, and the long tail of under-performing stores and misfires on new store openings has left the department store more vulnerable to its rivals. Umbers said since March some elements of the Brookes turnaround and growth strategy for Myer represented “solid retail fundamentals”, but that overall it did not deliver a business model able to respond to the new retail environment. This story first appeared in Inside Retail PREMIUM issue 2048. To subscribe, click here.