Bargain hunters are in for a treat this winter as Myer flags discounts of up to 60 per cent, while shareholders cringe at the prospect of more pain.
Myer shares shed almost eight per cent on Wednesday after the troubled department store warned its full year profit could drop by up to 15 per cent.
The retailer, like many others, is continuing to struggle to convince shoppers to part with their cash in some of the toughest trading conditions ever witnessed.
Announcing Myer’s latest batch of disappointing quarterly sales results, chief executive Bernie Brookes said sales were unlikely to improve in June and July.
“There’s only one problem and that is foot traffic coming through the store,” he told analysts.
“We’re selling customers more when they come in, we’re converting more customers, but there ain’t enough coming in the front door.”
He said he there were no signs of an improvement in customers’ propensity to buy goods, particularly clothes, as Australia experienced mild autumn weather.
The lack of shoppers through its doors has forced Myer to trim its full year profit forecast.
Myer had been expecting its profit to fall by about 10 per cent for fiscal 2012, but it lowered that forecast to no more than 15 per cent below the $162.7 million it made in 2011.
The surprise downgrade forced its share price down 17 cents to $2.00, not far off its all time low of $1.93.
“The reason that we’ve made the change to our forecast has been simply the fall off in sales during the course of the last six weeks,” Mr Brookes said.
The carbon tax, health care rebate and the Medicare levy were having a sizeable impact on customers, he said.
But Myer had not felt positive effects from the recent rate cut by the Reserve Bank, improving employment rate and the upcoming cessation of the flood levy.
In an attempt to get shoppers to spend again, Mr Brookes said Myer department stores would offer discounts of up to 60 per cent during its mid-year stocktake sale in June.
It is also spending millions on revamping customer service and online sales.
Total third quarter sales in the 13 weeks to April 28 were almost one per cent lower at $651.1 million, compared to the same period in the previous year.
Like-for-like sales, which strip out the effects of new store openings or closures, fell 2.1 per cent.
OptionsXPress Market analyst Ben Le Brun said Myer’s sales were in line with expectations and it seemed to be travelling better than rival David Jones.
“There could be even more pain for old-school retailers like Myer coming up,” Mr Le Brun said.
City Index analyst Peter Esho said money spent on acquiring fashion brand Sass & Bide would have been better spent on boosting online capabilities.