Chief executive Richard Umbers said average sales growth above three per cent between 2016 and 2020 was no longer achievable at the department store chain because of stiff competition and weak consumer spending.
Myer’s largest shareholder – Solomon Lew’s Premier Investments – has recently publicly criticised Umbers’ strategy and Myer’s flagging performance.
But the chief executive said on Wednesday his co-called ‘New Myer’ turnaround plan remained sound despite a 2.8 per cent decline in first-quarter sales.
“Two years ago when we released the New Myer strategy we did not anticipate the extent of deterioration in market conditions,” Umbers told investors at a strategy day.
“Our ambition of three per cent sales growth seemed appropriate at the time but it doesn’t seem appropriate now.”
Umbers acknowledged it was longer than expected to turn the business around, but said that did not mean it was wrong to focus on young shoppers, popular brands, concessions and targeted closures.
“A tough external environment cannot be a reason to slow down or stop investment for the long term,” he said.
Nonetheless, shares in Myer were down 2.5 cents, or 3.3 per cent, at 74 cents at 1115 AEDT.
Myer released a brief quarterly trading update to the Australian Securities Exchange following repeated requests from Premier, which owns more than 10 per cent of the retailer.
Comparable store sales in the 13 weeks to October 28 were down 2.1 per cent, but sales per square metre rose 3.6 per cent following the closure of some stores.
Myer said it would now measure performance against sales per square metre growth, although it has roughly halved that target to “more than 10 per cent” until 2020.
Umbers’ previous target for growth in earnings to outpace that in sales has also been scrapped.
Umbers said the retailer was now focused on what he indicated would be a more meaningful second quarter including the spring racing and Christmas trading periods.
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