Myer is closing stores and reducing floor space as it strives to generate as much as 10 per cent of its sales revenue online.
After reporting a five per cent fall in first quarter sales on Wednesday, the department store chain revealed plans to build a dedicated distribution centre in Victoria once its online sales reach $30 million.
Chief executive Bernie Brookes is confident Myer will reach an overall sales target of $4 billion by 2015 but was unable to indicate when the company would build the centre, which is expected to cost around $10 million.
“We’ve got this really good little measure that measures when we get to thirty million, but unfortunately it doesn’t have a timeline down the bottom,” Mr Brookes told analysts in a briefing on Wednesday.
Good retail management was about enhancing sales per square metre, optimising a portfolio of stores and taking advantage of online opportunities, Mr Brookes said.
Myer has reduced the size of its stores over the past few years but is unlikely to fulfil the dream of opening 100 stores nationwide in the mid term.
Heavy discounting has continued at the department store chain, with the latest figures showing deflation at around two to three per cent across the business.
Shares in Myer finished 6.5 per cent higher on Wednesday after the company reiterated its guidance for flat sales for its full fiscal year to July 30.
It also said first quarter sales to October 29 were down 5.1 per cent on a like-for-like basis.
The company’s full year guidance remains unchanged and, assuming no deterioration in trading conditions, expects flat sales and net profit as much as 10 per cent below the previous year’s net profit of $162.7 million.
Myer would continue to operate a total of 1.2 million square metres of space, with “a couple of store closures”, 12 stores opening and store space being reduced over the next five years.
The company has reduced stock in its electrical category to free up floor space while it renegotiates new leases in underperforming centres.
Mr Brookes said the company was “optimising” its portfolio of stores, including the closure of its Forest Hill store in Melbourne.
“The need for us to have larger stores has never been the case,” Mr Brookes said.
“We’ve been reducing stores over the last few years.”
Mr Brookes said there would be a change in the revenue mix but online retailing would likely make up between three to ten per cent of sales.
“Let’s say it’s ten per cent, it could be that in fact it’s $300 million of that $4 billion could be online.
“It could be $150 million online.”
