Yesterday Myer Holdings Ltd (ASX: MYR) was forced to go into a trading halt reportedly at the request of the stock exchange operator the ASX after claims appeared in the Australian Financial Review that the department store operator had suffered a poor sales quarter ending September 30, 2018.
However, late yesterday evening Myer revealed to the ASX that the situation wasn't quite as bad as the picture painted in the AFR, although it's evident the group is still facing serious problems due to falling sales across the board.
According to Myer total sales for the first 13 weeks to October 27 actually fell 4.8% or 4.3% on a same store sales basis. Online sales on an adjusted basis grew just 3.6% over the period, despite the strong shift towards online shopping as consumers shop from home more and more.
Myer's new CEO, John King, said of the result and group's strategic turnaround plan: "I want to be clear, our focus is on profitability and we will not chase unprofitable sales just to hit our top line sales number".
The group's new strategy is effectively to reduce discounting or sales prices in order to protect the critical profit margins, so while this may hurt top line sales it does not necessarily mean profitability will fall according to Myer's management.
"During the last five years, Myer has announced an NPAT loss (pre implementation costs and individually significant items) in the first quarter. Due to the heightened focus on profitability, NPAT loss (pre implementation costs and individually significant items) for Q1 FY19 showed an improvement on Q1 FY18".
This suggests that Myer at least saw an improvement on its bottom line over the quarter even if sales took a turn for the worse.
However, Myer is still facing some big problems heading into the vital Christmas shopping period, as competition rises and the stores suffer from under-investment.
The group also still carries a lot of debt and as such looks a high-risk investment even after its heavy share price falls.
Others across the retail sector have also been struggling recently, including Kogan.com Ltd (ASX: KGN), BWX Limited (ASX; BWX) and Reject Shop Ltd (ASX: TRS).
