Retailer Myer has announced half-year profits of $62.2 million, a drop of 23.1 per cent on the same period last year.

The store projected an even more disappointing full year profit of between $75 and $80 million, saying it expects costs to increase by $15 million over the second half.

The department store made no attempt to talk up the disappointing results, saying: “Trading conditions during the second quarter were challenging, only improving in late December.

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“The stocktake sale was ahead of last year on a total and comparable store sales basis, however this was not sufficient to make up for the shortfall in sales earlier in the half.

“The highly competitive environment, together will the overall effect of a weaker Australian dollar, contributed to a deterioration in the gross profit margin of 24 basis points.”

In talking down the current retail environment, it could be preparing the way for a number of store closures, something Citigroup analysts predicted yesterday. It has already cancelled plans to open a new store in Sydney.

While Myer chief executive Richard Umbers did not discuss the subject of store closures, he did say the store was planning major changes, including a move towards “omni-channel” retailing.

“There is strong evidence that department stores can transform and be inspirational to customers. Our international peers have responded to disruption by leading in omni-channel, by reinventing the in-store experience, overhauling the range, and by differentiating through innovation.

“Our new strategy to bring the love of shopping to life will be guided by a clear vision and a plan to win back market share, to respond faster to change and deliver a sustainable recovery in earnings,” he said.

Myer shareholders will receive a dividend of 7 cents per share.