Myer’s executive chairman has criticised poor decisions and competition “failures” under ex-chief executive Richard Umbers’ leadership after the department store slumped to a $476.2 million half-year loss.
Garry Hounsell, who was appointed chairman five months ago and then executive chairman in February after Mr Umbers was ousted, said the first half was blighted by poor strategy and rushed changes, including a failure to fight aggressive competition in the lead-up to Christmas.
“In addition, the execution of strategic initiatives could have been better managed,” he said in a statement.
Mr Hounsell, previously a strong advocate of Mr Umbers’ ‘New Myer’ strategy, which included store closures, brand overhauls and a focus on big-spending, fashion-forward professional women, made no mention of the strategy’s name on Wednesday.
“Some elements of the strategy which targeted a new high value customer were rolled out too quickly and didn’t balance enough attention on Myer’s traditional customer base which adversely impacted profitability,” Mr Hounsell said.
Mr Hounsell said he has been “driving the management team to trade the business more aggressively”.
The temporary Myer head – who is still searching for a new CEO – wants to shift focus back to Myer’s traditional customer, prompting an analyst to question whether the “traditional” Myer shopper even existed anymore in a market splintered by online shopping and aggressive international retailers such as Zara.
Mr Hounsell said the company’s database showed there were still traditional customers who wanted to shop at a big department store.
He said he has shifted focus back to product, price and customer service, including a focus on Myer’s private labels and exclusive brands.
Myer is also seeking to further cut costs and is in discussions with landlords on lease costs and tenure.
Myer’s near-half-billion dollar loss was driven by a $515.3 million impairment of goodwill and brand names but trading conditions remain challenging, with key like-for-like sales dropping three per cent for the six months to January 27.
Pre-impairment profit for the 26 weeks to January 27 fell 36.1 per cent to $40.1 million which is in the upper end of guidance given in February.
Myer also suspended its interim dividend and after rising in early trade its shares were flat at 43 cents at 1400 AEDT.
UBS analysts said the profit, excluding impairments, was better than the market had expected.
Myer also cut its directors’ fees, with Mr Hounsell’s chairman fee reduced by $50,000 to $300,000 and will not be paid until a new CEO is found.
Mr Hounsell will be paid $83,333 a month while he is executive chairman.
Myer sinks into the red
- Half-year net loss of $476.2m vs. $62.8m profit
- Total sales down 3.6pct to $1.7b
- No interim dividend vs. 3.0 cents