Myer to shut three stores on slow sales

Myer's $600 million five year turnaround plan is fraying at the edges

Myer's $600 million five year turnaround plan is fraying at the edges. Wayne Taylor

Department store Myer says it will close more stores in what it expects to be another hard year after its bottomline profit tumbled 80 per cent due to writedowns on the value of some of its fashion brands.

Australia's biggest department store operator Myer Holdings Ltd said on Thursday underlying annual net profit fell 1.9 percent as intense competition and soft retail spending took a toll.

Total sales growth was down as well by 1.4% - $3,201.9 million lower than the previous year, which it says in part reflects the closure of three stores.

Increased pressure on the retail industry and the presence of worldwide shipping giants including Amazon has decimated the Australian icon and CEO Richard Umbers says they have fallen well short of analysts predictions.

Performance of sass & bide had been below expectations during the period, with full-year sales $10.9 million below the prior year.

Myer has cut its net profit after tax forecast for the fiscal 2017 year.

Underlying net profit fell 1.9 percent to A$67.9 million, still its lowest since listing.

Since the launch of New Myer in September 2015, the company has closed 74,670 square meters of store space overall.

"We are obviously disappointed to have not reached our target of exceeding last year's NPAT of $69.4 million and that progress against our metrics, that matter, is slower than we anticipated".

The result affirms Myer's standing as the highest-profile retail-sector casualty of wage stagnation and an onslaught from cheaper global rivals like Inc and ASOS Plc.

"However, Myer has become a leaner, more productive and efficient retailer, better placed to compete in a rapidly changing environment".

Australian couture label Sass and Bide have had their book value written down by $38.8 million as a result of the dramatic drop in profits.

He said new market entrants were expected to hit sales, along with existing competitors, changes to consumer demographics and increased online competition.

Mr Umbers said Myer had seen a subdued start in the first six weeks of the 2018 financial year.

"We know that the next wave of changes are coming. and Myer will be ready", Mr Umbers told investors.

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