DEPARTMENT store giant Myer (ASX: MYR) has confirmed it is struggling to turn around sluggish sales amid weak consumer spending and "discount fatigue" with a 1.4 per cent drop in net profit for the full year to $67.9 million.
However, Myer's statutory net profit was just $11.9 million, a fall of 80 per cent from the previous year and its worst profit result since it listed in 2009 as writeoffs and impairments hit the company's bottom line.
Total sales were also down by 1.4 per cent to $3.2 billion for the year to 29 July 2017 and reflected earlier warnings from CEO Richard Umbers that "challenging trading conditions" would weigh on Myer's performance.
"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," Umbers says.
"We have made significant progress to deliver New Myer which has assisted the company to withstand the challenging retail conditions characterised by heightened competition, subdued consumer sentiment and discount fatigue," he says.
"However, Myer has become a leaner, more productive and efficient retailer, better placed to compete in a rapidly changing environment."
Fierce rival David Jones last month called out falling consumer confidence as a major factor behind its 0.7 per cent fall in full-year comparable sales.
Analysts had predicted that Myer would produce a weaker performance in its full year results and in July, the company announced it will take a total $45.6 million hit after writing off the value of its 20 per cent stake in Topshop's Australian franchisee and impairing the value of its struggling sass & bide brand.
The company will now shift its focus to further developing its omni-channel business in response to the shift in consumer demand to making purchases online.
"In the year ahead, we will be rolling out further initiatives particularly in our strongly performing omni-channel business in anticipation of a further wave of change in consumer and competitive behaviour," Umbers says.
Myer says the omni-channel business had delivered a sales increase of 41.1 per cent to $177 million which represents a penetration of 8.2 per cent of total sales for the financial year.
Store closures in Wollongong, Brookside in Brisbane and Orange and space handback at Cairns and Dubbo has helped Myer improve its productivity and it also plans to let go of leases at Colonnades on the outskirts of Adelaide, Belconnen in Canberra and Hornsby in Sydney.
Umbers says the company will also focus on changing the scope of its retail offering to become more attractive to a change in consumer demand.
"Myer has continued to focus on a more innovative and experiential retail offer including the launch of cafes, pop-up shops, an ice rink in our Sydney store, a marketing campaign partnering with Katy Perry and dedicated clearance floors now in eight stores."
The company has reported that sales in the first six weeks of FY18 have been below expectations but is "well placed" for the upcoming trading periods of Spring Racing and Christmas. Its forecast NPAT for FY18 is $66 million.
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