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Myer profit drops 12.7pc
Myer profit drops 12.7pc

Myer shares closed down 1.08 per cent after the department store issued no profit guidance and said it would shut its Fremantle store.

Myer today said it had made a net profit of $139.4 million in the 52 weeks to July 28, down 12.7 per cent from $159.7 million the previous corresponding period.

Myer warned in May its profit could fall by up to 15 per cent from the previous year.

Today, its shares rose in early trade before falling back sharply.

As investor sentiment turned, its shares fell six cents, or 3.25 per cent, to $1.785 but recoverded to close at $1.82, down 2 cents (1.08 per cent).

The company said it had not provided any financial guidance for the year ahead because of an uncertain outlook due to the tough retailing environment and subdued consumer confidence.

Myer also cut its fully-franked final dividend to nine cents a share, from 11.5 cents.

The retailer’s total sales for the year to July 28 fell 1.3 per cent from the previous year to $3.1 billion, while like-for-like sales were down by 2.0 per cent.

The company said its sales performance improved in the second half of its fiscal year, although they were still down 0.8 per cent from the previous corresponding period, on a like-for-like basis.

"It certainly has been a story of two half years, with the second half improving on the first half,” chief executive Bernie Brookes told analysts on Thursday.

Mr Brookes said Myer would focus on growing its gross profit margin, with strong cash flow generation underpinning a stable balance sheet.

He said that as part of Myer’s strategic plan, the company would focus on customer service with longer shopping hours, better training and more efficient rostering.

"It’s a process that will never end as we step up and compete on a customer service perspective,” he said.

The company would also continue to focus on its online offering, enhancing its merchandise and strengthening its loyalty program, Myer said.

Myer will close the Fremantle outlet early next year, marking the end of a four-decade retail institution.The 70 or so affected employees would be redeployed to other Perth stores, Mr Brooks said.
Fremantle Acting Mayor Josh Wilson said the decision finally gave the City of Fremantle clarity for its Kings Square project.
“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,” Mr Wilson said.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.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, manging dDirector 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 chief exectuive 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.