Mar 5, 2020
Myer sees half-year profits dive, counting on clicks as shoppers stay home
Mar 5, 2020
Australia’s Myer Holdings Ltd said fears about the coronavirus would likely drive traffic to its online store, after reporting a decline in profit for a half year when it stopped stocking low-margin products.
The profit announcement on Thursday shows the country’s biggest upscale department store chain putting a gloss on trading conditions for a sector still reeling from a damaging bushfire season, the arrival of online giant Amazon.com Inc and years of soft consumer spending.
For brick-and-mortar retailers like Myer, the new coronavirus is just the latest headwind as a sharp slowdown in tourist numbers starves its stores of shoppers and creates uncertainty in supply chain arrangements.
“I can’t tell what the future holds but we’re driving online as aggressively as we can because if people are afraid to come out, they can still shop from home,” said Chief Executive John King on an a analyst call.
Stock deliveries from China were running up to six weeks late due to travel restrictions imposed to slow the coronavirus outbreak, while major city and tourist destination stores had experienced a slowdown in foot traffic, he said.
King gave no trading forecasts except to say he expected the challenging conditions to continue in the second half.
For the six months to Jan. 25, which was before most travel restrictions associated with coronavirus took effect, Myer posted a 37% fall in profit, including the impact of cutting Apple and other brands deemed by the store to be “unprofitable”.
Online sales however jumped 25% to A$168.2 million ($111.3 million), faster than the division’s 20% growth in the previous first half. Online sales were now 10.5% of Myer’s total sales, the company said.
All up, group sales fell 4%, although underlying profit, which excluded one-off items and changes to accounting methods, nudged up 0.5% to A$41.5 million.
Shares of Myer were trading flat by mid-session, underperforming a broader market gain of 1.4%.
Myer kept its dividend suspended, as it has done since 2018.
© Thomson Reuters 2021 All rights reserved.