Myer’s latest sales report for the period ending April 28 marks the department store’s sixth consecutive quarterly decline.
The embattled retailer has reportedly experienced a 3.1 percent drop in same-store sales for the quarter ending April 28, with further declines expected to persist through the July quarter. These results are slightly better than expected, with analysts previously predicting a decline of roughly 3.5 percent.
Marking the sixth consecutive quarterly loss, the decline in trade runs on from the weak trade in the lead up to the end of January, after Myer reported a 3.6 percent drop in sales over the busy holiday period.
Myer’s Executive Chairman, Gary Hounsell, remains tight-lipped about profits moving forward, saying on Wednesday that unseasonably warm weather over autumn had impacted winter sales.
“In February we announced a renewed focus on product, price and customer service, which delivered encouraging results during March,” he said.
“However, as reported by a number of other retailers, the unseasonably warm start to winter has impacted sales, particularly in winter apparel, shoes and accessories, which may impact profit in the fourth quarter,” he said.
Poor winter sales put a big question mark over the company’s profit guidance moving forward, as slow sales on heaters, cold-weather homewares and winter apparel will likely lead to heavy discounting over the next couple of months, which will put further pressure on gross margins.
However, despite these less than desirable results, Myer shares, which have dropped by as much as 60 percent this year, actually rose eight percent to 40.5 cents early Wednesday morning. It’s believed the improved share price is a result of Myer maintaining its loss at a consistent level, rather than losses worsening.
“Myer has produced a credible result in a very challenging environment,” said Citigroup analyst Bryan Raymond. “Like for like sales momentum has not meaningfully improved, but is not getting worse, despite a headwind from weather.”
Hounsell also announced that John King, Myer’s newly-appointed CEO will be commencing his position with Myer on June 4, after receiving his visa approval. This news follows King’s visit to Australia last week, where he toured a number of stores in Sydney and Melbourne to ‘lift’ the spirits of staff members.
Based on the department store’s latest figures, Myer’s overall sales for the quarter fell 2.7 percent to $635.3 million, dragging sales for FY18 down to a 3.4 percent total loss, with revenue of $2.3 billion.
Online Sales Outperform In-Store Results Tenfold
Unlike in-store sales, Myer’s online store experienced a strong period of growth in the April quarter, with sales increasing by 49.4 percent to $35.9 million. These strong results bring year-to-date online sales to $141.1 million.
April’s results were not reported via an investors phone conference like normal, with Hounsell citing King’s absence as the reason. However, the company has now revealed that starting in 2019, it will cease to supply quarterly sales updates.
Yet another poor performance report could trigger a reaction from Myer’s biggest shareholder, Solomon Lew, to fast-track his campaign to oust the entire Myer board after his company’s 10.8 percent share in Myer has plunged in value by 60 percent since March last year.
If Myer’s current downward spiral continues, the department store could be at risk of breaching banking covenants, as Citigroup claims the retailer will breach its 1.5 times fixed charges cover ratio if it downgrades earnings by another five percent in 2019.
Analysts are currently predicting further losses upwards of $6 million in the July quarter.
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