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The challenging retail market and a temporary store closure in Victoria have taken their toll on department store group Myer Holdings (ASX: MYR) which has reported a marginal fall in group sales so far this financial year despite a strong Black Friday performance in November.
In an unaudited trading update ahead of a shareholder meeting later this month to vote on a proposed merger of the Myer business with key assets owned by Solomon Lew’s Premier Investments (ASX: PMV), Myer has reported total sales of $1.59 billion for the 22 weeks to 28 December which was 0.8 per cent lower than a year earlier.
The drop in sales is partly blamed on the closure of Myer’s Werribee store between 14 February and 29 November last year due to building rectification works.
However, online sales are up 2.8 per cent with the company revealing that this represents 22 per cent of total sales during the period.
The broadly flat sales performance has led to a $15 million fall in operating gross profit to $560 million, which is down about 2.6 per cent from the previous year.
Earnings before interest and tax have taken a bigger hit, down $16 million or 25 per cent, to about $48 million.
Myer’s flat sales performance has mirrored the challenges faced by Premier Investments, which owns the Smiggle, Peter Alexander, Just Jeans and Jay Jays brands.
In a separate update, Premier Investments is forecasting total global sales of between $855 million to $865 million for the first half of FY25, with Australian sales broadly flat compared with the first half of FY24. The sales forecast compares with global sales of $879.5 million a year ago.
Premier Retail’s forecasts underlying EBIT of between $160 million and $165 million, down from $209.8 million previously.
Myer’s executive chair Olivia Wirth describes Myer’s year-to-date sales performance as “stable” amid the challenges faced by the retail sector.
“Trading during last year’s key sales events including Black Friday was strong, but consumers remain cautious and focused on value given persistent cost-of-living pressures,” says Wirth.
“Despite the challenging trading environment, I am pleased to report that we continue to record solid growth in our market-leading MYER one loyalty program.”
Myer says its performance this financial year has been impacted by increased costs and “ramp-up complexity” at the company’s new national distribution centre at Ravenhall in Melbourne.
The company says the issues at the distribution centre have “delayed the realisation of expected benefits” to Myer’s business.
Meanwhile, Myer has announced that shareholders will meet on 23 January to vote on the acquisition of Premier Investments’ Apparel Brands division which comprises Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti.
The scrip-based quasi-merger will give Premier Investments’ shareholders control of more than half of Myer’s shares while bolstering the department store group’s annual revenue to about $4 billion.
Premier expects its Apparel Brands business to deliver global sales of between $405 million and $412 million in the first half of FY25, delivering underlying EBIT of between $31 million and $35 million. This is $16 million to $20 million lower than the previous year.
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