Myer CEO Richard Umbers is defiant in the face of its full year profit downgrade, saying it’s responding to the challenging external environment by providing engaging retail experiences and remaining focused on its New Myer strategy.
Myer’s full-year profit looks to take a blow as it wipes out its 20% Topshop stake and downgrades the value of its troubled chain, Sass & Bide. Deputy CEO, Daniel Bradken, will also leave the retailer amidst its profit downgrade.
Despite this, Umbers has backed the department chain’s turnaround strategy, known as New Myer.
Umbers said that Myer is responding to the challenging external environment in a way that “preserves the integrity of the New Myer strategy that is built around customer service, engaging retail experiences and wanted brands, while continuing our focus on efficiency and productivity.”
Myer said that weak trading conditions in June, and particularly in July, means that its anticipated $69 million full year profit is now expected to be between $66 and $70 million.
“The period of the June – July Stocktake sale has traditionally been an important period of profit generation for Myer,” said the company’s chief executive, Richard Umbers.
“This year we have executed a number of new initiatives to engage our customers, drive foot traffic to our stores and increase average transaction value. These initiatives have delivered positive results and have provided some mitigation against volatile and challenging trading conditions.”
In an ASX statement release, Myer also announced some sizeable decisions around its assets, that will see it wipe out a total of $45.6 million in its financials.
Myer confirmed it will bear $6.8 million worth of financial loss in its decision to write down the entire value of its 20 percent stake in Topshop Topman’s Australian business.
The department chain said it has been unable to secure a deal on “acceptable commercial terms” with Topshop’s brand owner, Arcadia Group, to keep its concessions trading. Over the last couple weeks, Myer has been quietly closing down the 17 Topshop concessions in its stores, in the lead up to its end of financial year.
Myer also confirmed that it will downgrade the value of its fully-owned fashion chain, Sass & Bide, by $38.8 million (which previously had a book value of $50.6 million in 2015/16). The performance of sass & bide has been challenged during the past year, as outlined in Myer’s half year and third quarter 2017 results.
Amidst all of this, Myer also sees the unexpected departure of its deputy chief executive officer, Daniel Bradken, who had only been in the role for just over two and a half years. Bradken, along with Umbers, has played an instrumental role in developing the New Myer strategy.