Department store chain Myer is gearing up for a busy festive season as it invests up to $50 million in its online store.

The retailer is also spending up big on store refurbishments and new stores as it prepares to go head to head with major international digital retailers.

Chief executive Bernie Brookes expects a good Christmas and stocktake period, but he remains cautious about the year ahead due to challenging consumer and economic conditions.

“We’re quite cautious about the outlook for 2014,” Mr Brookes told Myer’s annual general meeting in Melbourne.

He said the retailer was well prepared for the festive season after reporting positive growth in four of the past five quarters.

“We are well positioned for Christmas,” Mr Brookes said.

“We’ve got the best stock levels that we’ve had.”

Myer made $691 million in total sales in the quarter ending October 26, which was up 0.44 per cent on the same period in the previous year.

The retail chain is embarking on a $90 million capital spending spree in the year ahead, on new stores, refurbishments and building the company’s online capability.

As a result it anticipates heavy cost imposts in the first half of the current financial year, with the benefits expected to flow once refurbishments are completed.

Myer has already spent $35 million on its website and expects to spend up to $15 million further as it aspires for online sales to make up 10 per cent of total sales.

Chairman Paul McClintock expects the online business to reach profitability in the year ahead.

Myer also expects to improve its gross profit due to improved sourcing and limiting discounts.

The cost of doing business would grow by four to five per cent in the year ahead, including $11 million in one off costs from refurbishing three of Myer’s top 20 stores, it said.

Myer’s board plans to update the market next March about its global search for a replacement for Mr Brookes who will step down from the top job in August, 2014.

Myer shares closed steady at $2.48.