Myer chief Bernie Brookes is adamant better times are ahead for the retailer, but shareholders will have to wait until at least 2015 to see sales and profit improve.
The department store’s profit fell by eight per cent to $81 million in the six months to January 25, as flat sales figures and higher costs ate into its profit margin.
Investors were disappointed with the result, with Myer shares down 14.5 cents, or 5.45 per cent, at $2.515 at 1530 AEDT.
Myer’s total sales grew by just 0.3 per cent in the half year, well below the 3.8 per cent growth rival David Jones recorded in the same period.
Mr Brookes doesn’t expect Myer’s position to improve during the second half of the year, but the company is forecasting growth in both sales and profit margins in 2014/15.
Myer has refurbished 24 stores in the past five years, and exited underperforming categories like whitegoods, which had dragged on its sales figures.
“We needed to go about this enormous rebuild and it has taken time,” Mr Brookes said.
Sales are expected to improve after refurbishment work is completed by mid-2014.
“I think our top-line growth is certainly on track for 2015 to harvest a lot of the benefits of the money we’ve spent,” Mr Brookes said.
Myer’s half year sales were skewed by the closure of its Dandenong store in Melbourne and disruptions of refurbishment work at three others.
Sales would have been worse if Myer hadn’t cut prices in the lead up to Christmas to lure in more customers, Mr Brookes said.
“It was a pretty tough six or seven weeks and so therefore we needed to compensate to keep the sales line up,” he said.
Consumer sentiment remains soft, and retailers still need to offer discounts to attract customers, Mr Brookes said.
“Customers aren’t spending freely and I think that reflects the nature of the market that we are in,” he said.
But Myer’s position should improve, whether or not its proposed merger with David Jones goes ahead, Mr Brookes said.
Myer has proposed a nil-premium share-swap merger that, it says, could deliver cost savings of around $85 million a year.
David Jones is considering the proposal but chief executive Paul Zahra on Wednesday said the nil-premium offer “didn’t make sense” for his shareholders.
