Myer has done an about turn on its profit guidance for 2010/11 following "significant" sales declines in November, early December and January.
The national department store announced it expects national profit after tax (NPAT) for 2010/11 to be up to five per cent less than last year's $169 million NPAT figure.
This estimation varies substantially from Myer's November 2010 profit guidance, when the company announced it expected NPAT to grow between five and 10 per cent on the prior year.
The drop in outlook follows six months of trade wherein sales dropped to $1.733 billion, down 3.54 per cent on the first half of 2009/10. In particular, the company reported the November 2010 interest rate rise “had an immediate and noticeable impact” on November and early December sales. This was coupled with a “significant, unexpected and rapid decline” in January sales.
Myer CEO Bernie Brookes said the six months to January 29 had been characterised by fragile consumer confidence and a highly competitive retail environment with widespread discounting.
“We, like other discretionary retailers, have observed a consumer that is more cautious to spend and has an increasing tendency to save,” Brookes said.
“Sales were also negatively impacted in the second quarter by unseasonable wet and cool weather, with disappointing sales in seasonal merchandise across apparel and footwear. From late December, there was a deterioration in trading across Queensland, New South Wales and Victoria as a result of the devastating floods.”
Brookes said categories that had performed well during the first half of 2010/11 included homewares and youth product. The company reported sales in the lead up to Christmas and the first week of its stocktake sale were in line with last year.
Fashion brands available at Myer include Aurelio Costarella, Jayson Brunsdon, Karen Walker and Leona Edmiston. The department store has also recently signed labels Arthur Galan, Simona and Sass & Bide.