Myer is “stealing back” sales from its online rivals by lowering prices to compete.
Myer boss Bernie Brookes says the retailer is working with suppliers to bring its prices, particularly in its cosmetics department, closer to those offered by internet retailers.
While Myer’s new prices are still up to 10 per cent higher than those online, Mr Brookes said the gap, which was previously as high as 60 per cent, was closing and sales were up.
“As we’ve reduced the prices there’s no doubt we’re seeing volumes increase quite significantly,” he said.
“It’s not about people putting more creams on their faces or more lipstick on their lips.
“What it’s about is replacing the sales that would have been online with sales in-store.
“I think there’s quite a few years to go…for us in stealing back some of those online sales.”
IG Markets strategist Evan Lucas said bringing prices in line with online retailers was essential for the survival of department stores.
“The good old days of having margins in the vicinity of 50 to 100 per cent on clothing I personally believe is dead,” he said.
“It’s just a new world that they getting used to. Online will just kill them if they start charging at that amount again.”
Mr Brookes’ comments came as Myer posted a first half profit of $87.9 million for the six months to January 26, up one per cent on the previous corresponding period.
The result was higher than the $85 million expected by analysts.
Myer shares closed 17 cents, or 5.86 per cent, higher at $3.07.
Despite the good result, Mr Brookes would not give guidance for the full year due to uncertain external factors such as September’s federal election and the US economy.
But he did believe consumer confidence was improving.
“I think it’s stabilised, the unemployment numbers are good, things are improving for equity markets and we’re seeing more consistency for international events,” he said.
“There’s a lot of things that are heading in the right direction but there’s still a long way to go.”
There had also been less volatility in Myer’s sales on a week to week basis than a year ago.
“It’s fair to say that those wild 10 per cent swings are no more and we’re now seeing a more consistent band of sales on a daily basis,” he said.
During the half, Myer managed to offset higher operational costs by negotiating lower rents with some shopping centre landlords.
Mr Brookes said the company’s investment in customer service was also starting to reap benefits with fewer complaints from shoppers unable to find a sales assistant in Myer stores.
