Rising interest rates has put a downer on Myer’s first quarter total sales.
Myer has reported sales for the period ending 30 October is down 1.53 per cent to $706 million compared to the previous corresponding period, in which Myer delivered a record result with sales growth of 5.21 per cent.
Bernie Brookes, Myer CEO said in a statement that recent interest rate rises are seeing consumers remain cautious in their spending levels.
“Myer delivered a credible sales result in the first quarter of FY11, notwithstanding that the consumer remained cautious in the face of growing concern around rising interest rates and uncertain economic conditions,” he said.
Home, women’s accessories, menswear and youth apparel performed strongly during the first quarter offset by relative weaknesses in the entertainment category, particularly impacted by the price deflation especially in large screen televisions.
“In an increasingly competitive environment, Myer maintained a competitive position while price deflation occurred across most categories. Remember also that Myer achieved a record sales performance in the first quarter of last year supported by the Government stimulus payments and additional marketing of Myer through the IPO period,” Brookes said.
The strongest performing sales were Victoria and Queensland.
According to the company, sales for the remainder of 2011 will benefit from a number of key growth initiatives including two new stores, the return of Myer Melbourne and two store refurbishments.
“The recent interest rate rise and current consumer caution will again make trading conditions challenging on a comparative basis, however from November onwards we expect to see the benefits from a number of recent initiatives including contributions from our new stores at Top Ryde and Robina, as well as significantly improved contribution from Myer Melbourne where seven floors are currently trading,” Brookes said.
He also noted that ongoing benefits from the company’s turnaround initiatives including its world supply chain, refined merchandise strategy, IT investments and expanded Myer One program will assist in re-boosting profits.
“Our new point-of-sale (POS) system has now been rolled out across all stores, and so far we have had very positive feedback. The new system has helped markedly reduce transaction times, giving team members more time to spending serving customers.”