Mixed bag for department store chain Myer as new Apparel Brands disappoints
Myer has posted a mixed trading update, with a better performance from its chain of department store but a big drop in sales from its newly acquired Apparel Brands fashion portfolio.
The portfolio — which includes shopping mall mainstays Just Jeans, Jay Jays, Dotti, Jacqui E and Portmans — was picked up by Myer from Solomon Lew's Premier Investments late last year in a deal worth almost $900 million.
But it has been a rough few months for Apparel Brand under new management, with Myer reporting on Friday that sales of $211.2 million across the stores in the first 16 weeks of the second half of the financial year were down $8.3m, or almost 4 per cent, on the same period a year earlier.
Comparable sales were off 3.7 per cent and online sales tumbled 3.5 per cent, making up 16.8 per cent of sales.
It was a different story at Myer, which notched up total sales over the period of $837.2m, up 1.9 per cent on a year earlier.
Comparable sales rose 1.5 per cent and online sales rocketed 9 per cent, and now represent 21.4 per cent of total sales.
Myer said second-half sales so far had been hit by a number of market-wide and company-specific factors.
These included margin pressure because of higher promotional activity across the retail sector as business try to lure in shoppers keeping a closer eye on their budgets and increased costs of doing business, particularly wages and property costs impacted by inflation. Unfavourable foreign exchange movements also affected the results.
Myer Group executive chair Olivia Wirth said challenging trading conditions had been exacerbated by a subdued retail environment in the lead-up to the Federal election earlier this month.
'Consumers remain cautious and focused on value in response to cost-of-living pressures and the current macroeconomic headwinds and uncertainty,' Ms Wirth said.
'This has resulted in volatile trading conditions with widespread promotional activity across the retail sector.
'We remain focused on resetting the business and implementing our strategic growth plan to position Myer Group as an omni-channel retail platform capable of delivering growth during all phases of the economic cycle.'
The ramp up of Myer's new national distribution centre in Ravenhall in Victoria had also caused headaches for the retailer, noting automation and integration issues had forced it to bring in a third-party logistics operation ahead of the next peak trading period.
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