The retail crunch has bitten deeper into revenue at Myer.
Its shares were tanking after the department store issued a profit warning and reported another drop in sales, worsening over the key Christmas period and New Year sales.
A short time ago, the shares were down almost 10% to $0.582.
“The significant deterioration in trading reflects ongoing challenging retail conditions with widespread industry discounting, a subdued performance of Myer’s Stocktake Sale and a continued shift in consumer behaviour characterised by reduced foot traffic and an increase in online shopping,” says Myer CEO Richard Umbers.
And Myer doesn’t see an improvement in retail trading conditions during the second half.
Bricks and mortar retailers have been hit by a shift to digital, sagging consumer sentiment and more competition from global players, including Amazon, in Australia.
In a second quarter trading update, Myer says total sales to the end of November were down 2.3% and comparable store sales 1.8% lower.
Sales during the first two weeks in December deteriorated and were down 5%.
Myer says net profit for the first half of 2018 would be “materially below” last year, between $37 million and $41 million.
And the key stocktake sale period was below expectations with total sales in January down 6.5%.
Over the first six months of 2018, sales were down 3.6% to $1,719.6 million, and down 3% on a comparable store sales basis.
Sales online in the first half were up 48.9%.
Myer has launched an impairment assessment of the carrying values of assets on the balance sheet
“Myer recognises the ongoing, challenging and competitive retail conditions and remains resolutely focused on improving foot traffic and sales across all channels during the second half including the need to remain competitive in key categories where we are facing the most competition,” says Umbers.
“I am in no doubt that our heightened focus areas including online and productivity are correct for this low growth environment as evidenced by the strong growth in online sales in the first half,.”
Myer Chairman Garry Hounsell said: “I recognise that shareholders will be disappointed with today’s announcement. I am continuing my Chairman’s review of all aspects of the business including MYER one, omni-channel, merchandise, marketing, customer service, property and a thorough cost review.”
He says the focus is on costs.