The Myer Holdings Ltd (ASX: MYR) share price has plummeted by 8.22% this morning after updating the market with its guidance.
The department store had previously announced that trading conditions had deteriorated sales had fallen at the start of the second quarter. Myer had announced that sales for the first two weeks of December were down 5% on the prior corresponding period.
Myer's trading during its 'Stocktake Sale' period in January was also below expectations with total sales down 6.5% on the previous corresponding period.
Today, Myer said that total sales in the first half were down 3.6% to $1.7 billion and that same store sales were down 3%. The one bit of pleasing information was that online sales were up 48.9% in the first half of FY18.
Myer expects the first half net profit after tax (NPAT) to be between $37 million to $41 million pre implementation costs and individually significant items.
The company is also looking at the carrying value of assets on the balance sheet, it expects to make a non-cash impairment charge as a result.
Myer CEO, Richard Umbers, said "The significant deterioration in trading reflects ongoing challenging retail conditions with widespread industry discounting, a subdued performance of Myer's Stocktake Sale and a continued shift in consumer behaviour characterised by reduced foot traffic and an increase in online shopping."
"Myer recognises the ongoing, challenging and competitive retail conditions and remains resolutely focused on improving foot traffic and sales across all channels during the second half including the need to remain competitive in key categories where we are facing the most competition."
Foolish takeaway
Myer said that it does not have a reasonable basis to provide a specific profit range for the full year at this point.
I'm not surprised to see Myer losing further ground. Competitors and online shopping are taking business away from Myer.
It's very rare for me to shop in Myer, but I happened to do so once during December. The confusing store layout of items sorted by brand not by item made it hard to find what I wanted, then the checkout queue time was lengthy considering it was less than a dozen people in front of me. This is first-world problem stuff, but it seemed a typical example of why Myer isn't keeping customers or attracting new ones considering that the company expects people to pay higher prices for products.
I wouldn't be a buyer of Myer shares at this price, or any price, unless the company somehow can completely change its business.
