Myer reveals first-quarter sales data after ‘unlawful’ leak forces it into trading halt

Myer has been pressured into releasing its first quarter trading figures after being forced into a trading halt by the ASX.

Myer at Westfield in Hornsby will be shut down. Entrance to second floor of the store. Hornsby, NSW, Australia, 16 September 2017. (AAP Image/Annika Enderborg)

The Australian Securities Exchange forced troubled retailer Myer (MYR) into a trading halt and pressured the department store owner to update the market on its first quarter trading performance.

The move was an embarrassing U-turn after chairman Garry Hounsell and new CEO John King had decided to no longer release quarterly sales results.

After its sagging first-quarter sales data was leaked to the media, Myer denied breaching disclosure rules, saying in an initial statement to the ASX yesterday it “well aware of its continuous disclosure obligations and confirms it is in compliance with them”.

Media reports claimed Myer’s first-quarter sales had fallen by 5.5 per cent, and that online sales were up 41 per cent on two years ago, but down 5.2 per cent compared to the same time last year.

However, in a late ASX release, Myer said the Fairfax article contained “unlawfully leaked, draft and incomplete financial information taken from an unapproved internal document relating to part of the Myer business.”

Myer advised that its total sales value for the first quarter of the financial year was 4.8 per cent below the previous corresponding period, and down 4.3 per cent on a comparable store basis. Total online sales grew by 3.6 per cent during the period.

Mr King said his focus would be on profitable sales: “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.”

Myer added that during the last five years, it has incurred an NPAT loss (pre-implementation costs and individually significant items) in the first quarter. “Due to the heightened focus on profitability, NPAT loss for the first quarter of fiscal 2019 showed an improvement on the first quarter of fiscal 2018,” a statement said.

“Myer reiterates that it has not given earnings guidance and that trading during the second quarter represents the most important contribution to Myer’s full-year profitability.”

The group had decided in May it would stop publishing quarterly sales updates this financial year, despite growing pressure from its largest shareholder Premier Investments and its chairman, rebel Myer investor Solomon Lew.

Mr Lew has again been in touch with shareholders as part of his campaign to ring up a “second strike” against Myer executives at the AGM at the end of the month.

At the Sohn Hearts & Minds investment conference in Melbourne yesterday, Mr Lew said he wasn’t surprised by Myer’s woes.

There was speculation that Premier Investments, which holds 10.8 per cent of Myer, had made representations to Myer to provide clarity on its current trading performance.

On the back of the disclosed results, it’s likely retail analysts could cut their first-half earnings numbers for Myer given the weaker-than-expected start to the company’s financial year.

An ASX spokesman yesterday said the trading halt would help prevent “uninformed trading.”

Myer is also one of the most held short stocks in the market. An ASX and ASIC analysis shows about 8.7 per cent of the company’s shares are held by short investors, which makes it the 17th most shorted stock on the market.

The likelihood of further shorting, which would have driven down the stock’s price further, was another reason for the company to be put in a trading halt.

Myer’s sales fell 3.2 per cent in the year to July 28, slashing underlying profit by 52 per cent to $32.5 million before $541.2m in costs and significant items. Second-half sales were down 2.4 per cent on a same-store basis, which Myer said showed an improvement in performance.

Mr Lew has been a constant critic of Myer’s board since buying a stake long perceived as a foothold for a takeover.

Myer shares had fallen to 45c, from $1.19 the same time last year, before the halt was called on its trading yesterday.