Richard Umbers apologises for Myer’s worst result since listing

Myer has skidded to its worst result since it floated in 2009, prompting chief executive Richard Umbers to apologise.

Myer CEO Richard Umbers believes the company is on the right track. Picture: Aaron Francis.

Myer has skidded to its worst result since it was floated on the sharemarket in 2009, prompting chief executive Richard Umbers to apologise for its failure to meet profit benchmarks he set down two years ago.

But he held out the promise of better times ahead as he reshapes the department store to deal with the harsh realities of the retail sector.

Unveiling an 80.4 per cent slide in full-year net profit to $11.9 million, which was dragged lower by $56m in write-offs, impairments and charges linked to a stable of underperforming fashion labels and businesses, Mr Umbers put a brave face on the latest results for the nation’s biggest department store.

Mr Umbers, the former British army officer and Australia Post executive, said in light of the headwinds whacking retailers it was a credible result, with Myer’s online channel growing profits and the slimming down of its floor space helping with productivity while cash conversion was strong.

But he admitted Myer had fallen short of his expectations when he unveiled his ambitious “New Myer” strategy in 2015 that would harness $600m in investments and initiatives that would eventually deliver earnings growth.

“I have to tell you I am disappointed with this,’’ Mr Umbers told The Australian yesterday as the retailer unveiled a full-year underlying net profit of $67.9m, down 1.9 per cent, and near the bottom of the earnings forecast of $66m-$70m when the retailer shocked investors with a profit warning in July.

“I did say we were going to lift profitability, I did say we would lift EBITDA ahead of sales growth, and I regret that that didn’t happen ... and I genuinely wish it could have been different,” he said.

“But I’m also still believing we are doing the right thing, this is the right strategy, we are still committed to it.”

Revenue for fiscal 2017 was down 2.67 per cent to $3.2 billion. Like-for-like sales dipped 0.2 per cent. The dour 2 per cent fall in comparable store sales in the third quarter, which helped drive the profit warning, did improve towards the end of the year with fourth quarter comparable sales 0.2 per cent weaker.

The poorer result yesterday saw Myer slash its final dividend by a third to 2c per share, payable on November 9, taking the full year payout to 5c per share, flat with last year.

There will also be more store closures as Myer will not renew leases at Colonnades, Belconnen and Hornsby. Since 2015 Myer has closed or announced the closure of 74,670sq m of store space.

Myer’s sales and profits have hardly budged since it listed on the ASX in 2009. In 2010, when it reported its maiden full-year result as a listed company, its profit was $67.1m on sales of $3.32bn.

Mr Umbers said Myer had made significant progress in its transformation plan in challenging retail trading conditions characterised by heightened competition, “discount fatigue” and subdued consumer sentiment. “I accept the result is not where we want it to be, but online is heading where I dared hope it would be.”

JP Morgan analyst Shaun Cousins said gross margins were weaker than expected.

“Given the negative sentiment toward Myer leading into the 2017 result this announcement is likely to be relatively well received, but the challenges for the business are structural (consumer, competition) which we believe will weigh on the pace and effectiveness of change possible under the ‘New Myer’ strategy.”

Shares in Myer rose 1c to 73c.