Target in sights as Myer plans to lure shoppers
Department store chain Myer will switch its focus from relentless cost-cutting to driving sales growth and grabbing a greater slice of the discretionary spend by shoppers.
The country's biggest department store chain will hold a "Super Saturday" stocktake sale this weekend to pump up sales and shift an overhang of stock held by some of its suppliers.
It will use the occasion to remind budget-conscious shoppers of its offers before an expected price war with ailing rival Target.
Chief executive Bernie Brookes, who unveiled the fourth consecutive quarterly rise in same-store sales growth for the first time since 2010, warned of a downturn in consumer confidence since the release of the budget this month, with shoppers "less interested in spending".
"This is not a heyday for discretionary retailers ... it's still very patchy and inconsistent and there is no signs of significant turnaround in consumer sentiment," Mr Brookes said as Myer reported only a minor rise in sales for the third quarter, up 0.5 per cent to $652.5 million.
"We're quite realistic about the challenges that face our business as well as our customers."
Although the quarter was relatively flat, with comparable store sales up 0.4 per cent, Myer did manage to stitch together four quarters of sales growth and is perhaps on track to record its first full financial year of sales gains since 2007.
"It's a good sign, it reflects the fact that we're getting the benefit out of all the investment we've made in the last couple of years - we're pleased but certainly not contented," Mr Brookes said.
Consumer sentiment remains in the doldrums, as shown by the latest Westpac-Melbourne Institute confidence index dropping by 7 per cent in May and stuck below its long-run average.
It comes as Target last week issued a profit downgrade and could clear as much as $100 million in unwanted stock, placing further pressure on discretionary retailers such as Myer, Big W, David Jones and other chains as a new margin-pinching price war looms.
Mr Brookes said if Target pulled the trigger on discounting, Myer should dodge the worst of the competitive threat because it played in a different fashion sector, but it would remain competitive. "We do have a renewed focus on driving top-line growth and I think four consecutive quarters of comparative sales growth shows the fact we are sales-focused," he said.
Its shares closed down 9¢ at $2.68.