Embattled department store giant Myer has slumped to a full-year net loss of $486 million after sales continued to fall.
Myer’s sales fell 3.2 per cent in the year to July 28, slashing underlying profit by 52 per cent to $32.5 million before $541.2 million in costs and significant items.
Second-half sales were down 2.4 per cent on a same-store basis, which Myer said showed an improvement in performance.
Recently installed Myer chief executive John King, who replaced Richard Umbers after he was ousted in February following a series of profit downgrades, said the profit loss was “disappointing” and “clearly this needs to be better”.
“These results are obviously disappointing and shareholders deserve better,” he said.
Mr King, who admitted Myer has a track record for failing to execute business strategies, outlined a “customer first” plan to increase online sales, decrease the size of the stores and increase the focus on selling products exclusive to the department store.
“It’s about transforming that customer experience in store to make them want to come in, and to give them a reason to come in,” Mr King told investors in a call on Wednesday.
Online sales rose 34.1 per cent to $192.5 million but represented 7.7 per cent of total sales.
Mr King, the former boss of UK department store House of Fraser, said a new Myer website will be launched this month.
Since starting in June, Mr King has cut executive and senior management roles to reduce costs but said on Wednesday, front-of-store staff won’t face job cuts.
“In fact, we’ll be investing in customer-facing roles,” he said.
“What we don’t want is an army of administrators behind the scenes who are not doing anything to delight the customer.”
Vertium Asset Management portfolio manager Daniel Mueller said Myer’s new customer-centric strategy seemed like a “motherhood-type statement” and doubted online sales could have a meaningful impact on performance.
“Online retailing in Australia is still less than 10 per cent of total retail sales,” he said.
“Even if they can push a bit and get double-digit earnings growth, it’s not going to make up for the rest of the business that’s in decline.”
Solomon Lew, chairman of Premier Investments and Myer’s largest shareholder, slammed the department store’s board following the results, labelling the directors an “absolute disgrace” and calling for the resignation of chairman Garry Hounsell.
“Mr Hounsell must step down immediately or risk having his board spilled by a strong shareholder revolt at the upcoming AGM,” Mr Lew said in a statement.
“Sales are down. Profits are down. Service levels are down. (Cost of doing business) has increased. Dividends have ceased.”
Myer’s headline loss was impacted by implementation costs and significant items of $541.2 million, of which $538.2 million were recorded as part of the first-half results, largely on writedowns of Myer goodwill and the brand name.
Myer’s shares slumped as much as eight per cent on Wednesday but at 1518 AEST were down 1.5 cents, or 3.5 per cent at 42 cents.
POOR SALES DRIVES DOWN MYER’S PROFIT
* Profit down 52.2 per cent to $32.5 million
* Sales fell fell 3.16 per cent to $3.1 billion
* No dividend paid