Myer downgrades profit, shares drop
Myer has downgraded its profit forecast and announced that deputy CEO Daniel Bracken is leaving the company, amid a collapse in negotiations with Topshop’s UK owner that has seen it close 17 concessions in recent weeks.
Myer shares plummeted over 9 per cent on early Thursday trading after it advised the market that continued weakness in trading conditions, particularly through the first half of July, had impacted its prior guidance that net profit after tax (NPAT) would be higher than $69.3 million in FY17.
It now expects FY17 NPAT to be between $66 million and $70 million, underpinned by pre-tax implementation costs of between $18 million and $20 million.
The department store has decided to write down the full $6.8 million value of its 20 per cent stake in the holding company for Topshop’s local operation, which was placed into administration in May.
The company said negotiations with Sir Phillip Green’s Arcadia group have stalled, which as Inside Retail reported last week, has seen it close all 17 of its Topshop concessions.
That move will be taken as an individually significant item when full-year results are released, alongside a $38.3 million impairment charge attributed to the continuing poor performance its fully-owned sass & bide retail operation – a 76.6 per cent reduction on the value of the business, based on 2016 accounts.
“The period of the June – July Stocktake sale has traditionally been an important period of profit generation for Myer,” CEO Richard Umbers said.
“This year we have executed a number of new initiatives to engage our customers, drive foot traffic to our stores and increase average transaction value. These initiatives have delivered positive results and have provided some mitigation against volatile and challenging trading conditions.
“We are responding to the challenging external environment in a way that preserves the integrity of the new Myer strategy,” Umbers continued.
Chief merchandise and customer officer, Daniel Bracken, who is also deputy editor, is leaving the company after two and a half years in the role. The company said Bracken “played an instrumental role” in developing the new Myer strategy, in particular with the introduction of new brands to the department store retailer.
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