By Aimee Chanthadavong
The progressive decline in sales during the Stocktake Sale, one of Myer’s biggest trading periods, coupled with a more subdued outlook for consumer spending for the year has forced Australia largest department store to revise its guidance for the financial year of 2011.
Myer has downgraded its profit outlook for the FY11 to be five per cent less than it was initially stated, which was a five to 10 per cent growth. It expects first half net profit after tax to be in the range of $106 million to $109 million.
Myer CEO Bernie Brookes said in a statement that trading in the past six months has been characterised by ongoing fragile consumer confidence and a highly competitive retail environment with widespread discounting,
“Consumers faced increased sales cost of living, including utilities, healthcare and petrol, compounded by the impact of successive interest rate rises. We like other discretionary retailers, have observed a consumer that is more cautious to spend and has an increasing tendency to save,” he said.
“Since that time, trading conditions have deteriorated and we now expect the challenging retail environment to continue into the second half of FY11.”
Bernie has also blamed the anticipated flood levy and flood inflation to put pressure on discretionary spending during the remainder of 2011.
“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, NSW and Victoria as a result of the devastating floods,” he said.
“Sales across many categories were impacted by price deflation as a result of increasing discounting, as well as the strong Australian dollar, which made purchasing overseas more attractive.”
The company’s electrical and apparel category were the least successful in comparison to homewares, furniture and youth offering, which “performed well”.
Again this year, sales in gift cards in the lead up to Christmas were strong, as value-focused customers sought to benefit from the Stocktake Sale.
“This year and last year gift cards we saw a really strong performance from our gift card sale and consumers are looking to benefit from the Stocktake Sale post-Christmas,” Jo Lynch, Myer spokesperson told RetailBiz.
Total sales for the six months ending 29 January were $1,733 million, down 3.54 per cent compared to the previous corresponding period. On a like-for-like sales basis were down 5.19 per cent.