Soft result expected from Myer

myerMyer could announce a review of the number and size of its outlets and the broadening of its online business when the department store giant reports its half year earnings on Thursday.

The latest earnings report will be the first delivered by Richard Umbers, who was recently parachuted into the CEO job after the surprise departure of Bernie Brookes.

Analysts are expecting a soft result and are hoping Umbers reveals some detail about the approach he’ll adopt to turn the retailer’s flagging sales around amid sluggish consumer sentiment and competition from online and global rivals.

“The latest official retail sales results didn’t shoot the lights out, particularly for department stores, so a soft result is expected (for Myer),” Morningstar analyst, Farina Parsons, said.

“What will be interesting is to see how they intend on turning the business around.

“I think the focus will be on omni-channel.”

Credit Suisse analysts say Myer should consider fast tracking any plans to restructure the company.

“It is feasible that Myer will be reconsidering the breadth and size of its stores in its regional store network, consider accelerating changes to product range and broadening its e-commerce capability,” the analysts said in a research note.

The Credit Suisse note was headed: “Never a better opportunity to bring forward restructuring”.

Deutsche Bank research analyst, Michael Simotas, said Myer’s second quarter sales growth is expected to be better than the first quarter due to improved economic conditions.

However, he expects the cost of doing business to outweigh sales growth.

“The company’s strategic direction is at a pivotal point and we are wary of the additional investment required, especially as the new David Jones owner plans significant investment,” he said in a report.

Myer has been battling disappointing sales growth for several years.

Its first quarter sales for 2014/15 were flat and well short of market expectations of a 2.5 to 3.0 per cent rise, with womenswear particularly disappointing.

Umbers, a former supermarket executive joined Myer in September 2014 as its supply chain boss, and was named as CEO on March 1.

Former Burberry executive, Daniel Bracken, who is also new to the company, was appointed his deputy.

Myer’s share price tumbled on the news as investors worried the sudden leadership change was a sign the retailer’s half year results and full year outlook will be disappointing.



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