Target in sights as Myer plans to lure 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.
Frequently Asked Questions about this Article…
Myer is shifting its focus away from relentless cost-cutting toward driving top-line sales growth. The retailer plans promotional initiatives — including a "Super Saturday" stocktake sale — to lift sales, move excess supplier stock and remind budget-conscious shoppers of its offers.
In the third quarter Myer's total sales rose 0.5% to $652.5 million, with comparable store sales up 0.4%. Management has reported four consecutive quarters of sales growth, putting Myer on track to potentially record its first full financial year of sales gains since 2007 — a sign investors may view as early recovery momentum.
Myer’s CEO Bernie Brookes warned of a downturn in consumer confidence since the budget, saying shoppers are "less interested in spending." The Westpac–Melbourne Institute confidence index fell 7% in May and remained below its long-run average, making discretionary retail conditions patchy and inconsistent.
Target’s recent profit downgrade — and plans to clear potentially up to $100 million of unwanted stock — could spark a margin-pinching price war. That would put pressure on discretionary retailers such as Myer, Big W and David Jones. Myer’s CEO says Myer should avoid the worst of the competitive threat because it operates in a different fashion sector, but the group would still remain competitive.
The "Super Saturday" stocktake sale is a short-term event Myer is using to boost sales volumes and shift stock held by suppliers. For investors, such promotions can help clear inventory, support near-term sales and indicate management is actively pursuing top-line growth amid competitive pressures.
Bernie Brookes highlighted four consecutive quarters of same-store sales growth — the first run of that kind since 2010 — and said the business is benefiting from investments made over the past couple of years. He also cautioned that conditions remain challenging and that the company is realistic about customer and market headwinds.
Following the update, Myer’s shares closed down 9 cents at $2.68, reflecting the market’s short-term reaction to the trading update and the competitive backdrop described by management.
Besides Myer, the article specifically names Target, Big W and David Jones as discretionary retail chains that could face pressure if Target’s stock clearance and discounting trigger a broader price war across the sector.
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