Myer has had a woeful start to Christmas, with its sales taking a sharp fall in December despite efforts to bring shoppers through its doors.
The embattled department store chain now expects profit for the first half of the current financial year to be “materially below” the $62.8 million it made in the same period a year ago.
Shares in Myer have plunged as a result to hit a new all-time low of 65.5 cents on Thursday, down seven cents or 9.66 per cent on Wednesday.
Myer’s total sales in the first two weeks of December were down five per cent on the same period a year ago – a further deterioration on the company’s 2.8 per cent sales decline in the first quarter.
The second quarter of the financial year is typically the most profitable for Myer, and it said it was currently unable to provide a specific profit range for the half or full year due to recent sales volatility.
Chief executive Richard Umbers said one bright spot was the group’s online sales which were up 62 per cent in the first four months compared to the same period a year ago.
However, online accounts for only about 5.5 per cent of Myer’s total sales.
“Trading during the past two weeks has been significantly below our expectations and the year to date run rate, and while there is an additional weekend of pre-Christmas trading this month, we do not know what the sales impact of that will be,” he said in a statement.
The grim performance is likely to fuel tension between Myer’s board and its largest shareholder, Premier Investments chairman Solomon Lew.
Mr Lew has been critical of Myer’s performance and its turnaround strategy of store closures, reduced store sizes and rolling out clearance floors of heavily discounted clothing.
Earlier this month, Mr Lew told Premier’s annual general meeting that there was worse to come for Myer and that “the numbers won’t lie.”
Myer chairman Garry Hounsell said on Thursday the group’s focus on improving its online store and its productivity were the correct priorities.
“Everyone at Myer remains resolutely focused on taking appropriate steps to ensure the business can maximise the performance during Christmas and stocktake sale,” Mr Hounsell said.
He said he would continue reviewing the business in the next 12 weeks.
Department stores have been under pressure following the arrival of overseas retailers, including Zara, Sephora and H&M, and now, eCommerce giant Amazon.
Morningstar analysts have said Myer was late to launch its online offering and the pressure on Australian department stores is unlikely to let up soon.
“We expect lower-long term returns on capital as Myer struggles to compete with cheaper domestic and international online business models,” Morningstar said in a note.
The shares have fallen by about a 40 per cent since Premier Investments bought its stake in March.
Myer listed in 2009 at $4.10 and its shares were trading at $1.37 at the beginning of 2017.