Department store retailer Myer (ASX:MYR) has warned it will report a significant fall in profit for the year to July 31.
The retailer told the ASX in an update on Thursday that net profit after tax will be down close to 30%, despite only a small dip in sales to around $3.2 billion for the 12 months.
Myer said it expected net profit after tax for the 2023-24 year to come in between $50 million and $54 million, down 28% from the $71.1 million reported for 2022-23.
The retailer attributed the weaker result to sales of around $3.266 billion, down 2.9%, primarily due to the closure of Myer stores in Brisbane city and Frankston in Melbourne.
Despite this, Myer reported that second-half sales performed well in the tough trading conditions, growing 0.8% on a comparable store basis compared to a year ago. Full-year sales also grew 0.4% from 2022-23.
However, the lower profit reflects the challenging consumer and trading environment, inflationary cost pressures, and the underperformance of three Myer Specialty Brands (sass & bide, Marcs, and David Lawrence) due to weak trading conditions and additional discounting.
Myer stated that the underperformance of these brands is expected to account for approximately half of the year-on-year decline in net profit after tax (i.e., around $10 to $12 million).
The retailer also dismissed concerns about overstocks, stating that total group inventory is expected to remain consistent due to tight inventory management and a focus on newness.
Additionally, Myer confirmed that the previously announced strategic review and exploration of a potential combination with Premier Investments’ Apparel Brands is ongoing, with an update expected in October.
Executive chair, Olivia Wirth, said in the release that the chain had a solid second half, demonstrating resilience in the face of a difficult trading environment for Myer and the wider retail sector. She emphasized the impact of the Brisbane CBD store closure and the underperformance of the sass & bide, Marcs, and David Lawrence brands.