Myer’s executive chairman has criticised poor decisions and competition “failures” under ex-chief executive Richard Umbers leadership after the department store slumped to $476.2 million half-year loss.
Garry Hounsell, who was appointed chairman five months ago and then executive chairman in February after Mr Umbers was ousted, said the first half was blighted by poor strategy and rushed changes, including a failure to fight aggressive competition in the lead-up to Christmas.
The troubled retailer’s half-year result was hammered by a more than half-billion dollar writedown on goodwill but sales continue to be a problem after a string of downgrades, falling three per cent in the six months to January 27.
Mr Hounsell told investors on Wednesday that he has a plan to restore the bottom line while also stressing that the company was in “caretaker mode” as it searches for a new CEO.
He described the first-half performance as “unsatisfactory”, pointing to weak Christmas sales and the execution of strategic initiatives that “could have been better managed”.
Mr Hounsell, previously a strong advocate of Mr Umbers’ “New Myer” turnaround strategy, which included store closures, brand overhauls and a focus on big-spending, fashion-forward professional women, did not refer to the plan by name as he named its flaws on Wednesday.
“Some elements of the strategy, which targeted a new high value customer were rolled out too quickly and didn’t balance enough attention on Myer’s traditional customer base which adversely impacted profitability,” he said.
Instead, the company will shift its focus back on its traditional shopper, with Mr Hounsell saying he has been “driving the management team to trade the business more aggressively”.
Analysts questioned whether the “traditional” Myer shopper exists anymore, in a market splintered by online shopping and aggressive international retailers such as Zara.
But Mr Hounsell said the company’s database showed there were still traditional customers who wanted to shop at a big department store.
He said he has shifted attention back to product, price and customer service, including a focus on Myer’s private labels and exclusive brands.
Myer is also seeking to further cut expenses and is in discussions with landlords over its leases.
The company took a $515.3 million impairment hit in goodwill and brand names but excluding those impairments, the group made a profit of $40.1 million in the half, down 36.1 per cent on a year ago.
It also suspended its interim dividend and after rising in early trade its shares closed 3.5 per cent lower at 41.5 cents.
UBS analysts said the profit, excluding impairments, was better than the market had expected but CommSec market analyst Steven Daghlian said Myer was still a disappointment.
Myer also cut its directors’ fees, with Mr Hounsell’s chairman fee reduced by $50,000 to $300,000 and will not be paid until a new CEO is found.
Mr Hounsell will be paid $83,333 a month while he is executive chairman.
MYER SINKS INTO THE RED:
* Half-year net loss of $476.2m vs. $62.8m profit
* Total sales down 3.6pct to $1.7b
* No interim dividend vs. 3.0 cents