Myer will close its Fremantle store early next year, marking the end of a four-decade retail institution.
Acting Fremantle Mayor Josh Wilson said the decision finally gave the City of Fremantle clarity for its Kings Square project.
In a statement to the Australian Stock Exchange this morning Myer Holdings Ltd said the store's lease would not be renewed and would close in the first half of the 2013 calendar year.
Myer CEO Bernie Brooks said leasing costs, as well as the impact of the proposed redevelopment of Kings Square on business and significant declines in turnover all influenced the decision to close the store.
Sunday trading was another nail in the coffin as it may reduce Fremantle’s dominance as a weekend shopping hub, he said.
Mr Wilson said: “While the City of Fremantle would have loved to have seen a revamped Myer within a redevelopment of that building, we understand the company’s decision as part of its comprehensive response to very challenging retail conditions Australia-wide."
He said Fremantle had prepared itself for the possibility that Myer would not renew its lease and had shaped its strategic planning on that possibility.
“The City has worked incredibly hard with Myer and with the new owner of the building to look at retaining the store and Myer has made it clear that their decision not to further extend the lease was made purely on the basis of wider commercial realities,” he said.
This morning Myer announced a 12.7 per cent fall in full year net profit to $139 million.
The retailer’s sales for the year to June 30 also fell but only by 1.3 per cent to $3.1 billion, compared to 2010/2011.
Myer also cut its fully franked final dividend to nine cents a share from 11.5 cents previously.
The retail giant said sales figures showed the majority of Fremantle customers shopped at nearby stores.
The 70 or so affected employees would be redeployed to other Perth stores, Mr Brooks said.
The acting Fremantle Mayor said he believed the store had been operating below its potential for many years.
“Myer has been part of the landscape in Freo for a long time, but of course the only certainty in life is change," Mr Wilson said. "Throughout its history Fremantle has navigated its way through a number of significant transformations with flying colours."
In 2010 the City of Fremantle put a strategic plan in place "to grow and revitalise" the community and to improve social and economic conditions in the CBD.
“Our economic development strategy is being steadily implemented and we are seeing the early rewards for that approach in the form of the Department of Housing’s planned relocation to Fremantle, the creation of WA’s first Business Improvement District, and the settled planning scheme amendments for the East End and the city centre," Mr Wilson said.
He denied the loss of the retail giant would drive customers to nearby shopping hubs like Garden City.
“That Myer store hasn’t been performing at its best for some time,” Mr Wilson said. “I don’t think people necessarily have been coming in drovers to that particular store in the way it has operated in the last ten years or so,
“Fremantle is not a shopping centre precinct, it’s a high street retail precinct, with high quality distinctive niche boutique retail offerings as its strength, and it’s also a mixed high quality retail and entertainment precinct, and those are the things about Fremantle that make it distinctive.”
Redevelopment plans for the Kings Square precinct could involve a revamp of the council-owned Queensgate building and carpark and the city’s administrative buildings.
He said the new owner of the building, Sirona Capital, was looking at a range of new tenants.
Sirona issued a statement saying Myer's withdrawal would not affect redevelopment plans for the commercial precinct.
Sirona will now “ramp-up discussions with the many other retail tenants” that have expressed an interest in the premises, Managing Director Matthew McNeily said this morning.
There are rumours Big W and Kmart are in talks about possibly leasing the space.
Fremantle Chamber of Commerce and Industry CEO Tim Milsom said all retail sectors were struggling, but it was not all doom and gloom as other retailers are poised to step into the breach.
“Obviously we have got people earmarked to take over from Myer, so I don’t think the building’s going to be empty that long,” he said.
“I believe Fremantle is more than a shopping centre. You come to Fremantle for a different experience, we have beautiful weather, beautiful beaches, a working port, … you have so many other attractions to come to Fremantle other than just shopping, so hopefully it won’t have a significant effect,” he said.
He said the advent of Sunday trading had already seen a seven percent reduction in through-traffic at the nearby Fremantle markets.