Myer has announced a $221 million share issue to help pay for an overhaul of its department stores after full year profit slumped by 69.7 per cent.
Shares in the retailer have been placed in a trading halt after it announced the share issue, which it says will pay down debt and go toward an overall $600 million investment.
Myer is pinning its hopes on a revamp to win over customers after years of weak growth in sales, which rose 1.1 per cent on a comparable stores basis to $3.196 billion for the 52 weeks to July 25.
It already announced it was dumping 100 brands to make way for new ones, one of which will be Topshop.
Myer said on Tuesday that it was taking a 25 per cent equity stake in the popular UK fashion brand’s Australian franchisee, Austradia.
The Topshop and Topman brands will appear in Myer stores in November.
“The new Myer strategy sets out a defined pathway to return the business to sustainable profit growth,” chief executive Richard Umbers, who took on the role when Bernie Brookes stepped down in March, said.
“We will achieve this by delivering a sharper and more focused retail offer that attracts more of the customers who represent the highest value to our business. ”
Mr Umbers said this would be supported by investment in the stores to make them more engaging and productive.
Myer’s move follows a similar overhaul by major rival David Jones, which dumped 180 brands and after a company-wide review of its own.
Sales at David Jones, which was bought by South Africa’s Woolworths for $2.1 billion in 2014, grew 10.7 per cent in the six months to June.
Myer’s net profit for the 52 weeks to July 25 was down to $29.8 million from last year’s $98.5 million.
The company took a $24.5 million hit from costs associated with two store closures and clearing brands, as well as $11.8 million in restructuring costs and a voluntary redundancy program.
“The decisions we have taken to deliver new Myer will lead to changes to both our store network and operations, resulting in a more productive and efficient footprint,” Mr Umbers said.
“Management has been actively addressing the underlying issues in the business.”
Myer forecast net profit for 2015/16, excluding the cost of the overhaul, of between $64 million and $72 million.
MYER IN THE MIRE
* Net profit down 69.7pct to $29.8m
* Total sales up 1.7pct to $3.196b
* No final dividend, vs 5.5 cents in 2013/14A
– with AAP