Struggling department store Myer is shedding 100 jobs in its latest attempt to shave costs during the toughest trading conditions in a quarter of a century.
Chief executive Bernie Brookes blamed higher costs related to Myer’s stores, utilities and wages for forcing the company into having to cut 100 back-office positions.
Mr Brookes said Myer decided to cut jobs after reviewing all parts of its business, from services and head office operations to its supply chains.
“While these decisions are never easy, they are prudent and necessary to ensure our business is attuned to our operating environment,” he said in a statement on Thursday.
The job cuts represent less than one per cent of Myer’s 13,000-strong workforce.
Myer, like many retailers, has been struggling to increase sales in what it says is the most difficult trading environment in 25 years.
In May it warned full year profit could slide as much as 15 per cent, instead of its previously forecast 10 per cent, after a drop in third quarter sales.
One analyst, who did not want to be named, said the job cuts would be interpreted as a “proactive step” – as long as Myer met its earnings forecast when it unveils its annual results in August.
City Index chief market analyst Peter Esho said the weak retail environment was not completely to blame for Myer’s woes. Myer’s middle-market positioning was causing more damage.
“Every retail business has been hurt but not all of them have the degree of issues which Myer has with its business model,” he said. “Myer’s always blaming external issues, but it simply doesn’t have competitive advantage.”
Mr Esho said that downturns presented opportunities for retailers to buy cheaper assets but Myer had so far failed to take advantage of these.
“This is an indication that Myer is struggling to exert its dominance or to really exploit opportunities which present themselves in a downturn,” he said. “Unfortunately Myer’s not in a position to exploit those opportunities because it has vulnerabilities in its own business model.”
News of the job cuts at Myer coincided with the release of official figures showing Australia’s unemployment rate rose to 5.2 per cent in June from 5.1 per cent in May.
But while the number of jobless Australians is rising, consumer sentiment and retail sales have showed signs of improvement.
The Westpac-Melbourne Institute this week reported an uptick in consumer confidence, buoyed by government cash handouts and interest rate cuts.
Retail spending figures released on July 4 also showed a 0.5 per cent rise for May.
Myer’s shares closed 1.5 cents lower at $1.66.
