Myer shares are tanking as profits fall and the new CEO admits the retail giant has been losing touch

Getty/Lisa Maree Williams

The new CEO of Myer says the store has lost relevance with some customers after posting a grim earnings report showing profit down 23% for the first half.

Richard Umbers, who this month replaced Bernie Brookes in the top retailing job, said recent strategy hadn’t been working.

He was commenting on the retailer’s half year results which showed sales running below expectations with profits forecast to be down for the full financial year.

Profits were down more than 23% to $62.2 million, and guidance on profit revised down for between $75 million and $80 million for the full year. The market had been estimating full-year profit at $89 million.

Shares fell 11% in early trade.

“Some elements of the existing strategy represent solid retail fundamentals,” he said. “Overall it did not deliver a business model able to respond to this new retail environment and we have lost relevance with some customers.”

However, he said there is strong evidence that department stores can transform and be inspirational to customers.

“Our international peers have responded to disruption by leading in omni-channel, by reinventing the in-store experience, overhauling the range, and by differentiating through innovation.

“Our new strategy to bring the love of shopping to life will be guided by a clear vision and a plan to win back market share, to respond faster to change and deliver a sustainable recovery in earnings.”

The company has been conducting a customer research project using internal and external data that’s attempting to analyse the current and future Myer customer, and what they want.

Umbers’ strategy will include customer driven decision-making — meaning all decisions will be guided using a targeted approach to current and future customers.

Merchandise and services will have a strong brand emphasis, space allocation and in-store experience.

The omni-channel strategy will be accelerated.

“We are confident that there is a significant opportunity available to the business in a changing retail landscape,” he said. “We look forward to sharing more details on our strategic review later in the year.”

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.