Bye fashionistas! Myer chases 'traditional' customers after $476m loss

Goodbye Eva - and welcome back, mums and dads!

That’s the message from Myer, which has vowed to try and lure back the "traditional" customers it lost when it started chasing after high-spending, fashion-forward shoppers.

The department store chain on Wednesday revealed a crushing $476 million net half-year loss, driven by $538 million in writedowns, mostly to its goodwill and brand names.

Goodbye, fashion addicts! Myer is looking to lure back its traditional mum and dad shoppers.
Photo: Tamara Voninski

But earnings for the six months to January 27 went backwards even without those charges, slumping to $40.1 million from $62.8 million in the same period last year as total sales fell 3.6 per cent, or 3 per cent on a same-store basis. Still, that profit was in the upper end of Myer's forecast from February 9 of between $37 million and $41 million.

Myer's shares jumped 3.4 per cent to 44c in early trade. At Tuesday's close the stock was down 65 per cent over the past 12 months.

Executive chairman Garry Hounsell, who is running the business after CEO Richard Umbers departed last month, said the result was "unsatisfactory" and reflected a number of mistakes Myer had made - including that it failed to respond to heightened competition in the market before Christmas.

He said Myer would now focus on product, price and customer service to get its "traditional customer base" spending again.

“We moved, in terms of the New Myer strategy, into areas too quickly, like Eva, and we did that at the expense of our traditional customer base," he said on Wednesday.

“We believe and we know that that traditional customer is still there.

“We are now re-looking at that to drive product and prices and customer services back that will attract our traditional customer base back.”

Ditching fashion-addicted model customer Eva

In 2015 Myer launched its New Myer strategy and highlighted a model "high-value" customer called Eva - a "happy, busy, typical Australian woman", for whom buying on-trend fashion was "a healthy addiction" she was prepared to pay for.

Mr Hounsell said Myer was also taking steps to improve customer service, and was trailing the use of commissions to motivate sales staff.

The store was also reinvested in staff training, which was focusing on basics such as how to say "hello" to customers, Mr Hounsell said.

Myer said sales had improved in the first seven weeks of the second half as it cut prices, but noted that “volatility continues to exist”.

Myer said it remained within all conditions put on its debt by its lenders - a key concern for investors going into the result.

The writedown has shrunk Myer's net assets from $1 billion to $580 million - above the $500 million minimum threshold agreed with lenders, while its fixed charges cover ratio sat at 1.65 times, above the covenant of 1.5 times.

Chief financial officer Nigel Chadwick said Myer was in talks with its bankers to refinance its current debt, and had sufficient headroom in its covenants to see it through the coming months while that happens.

The half-year loss is likely to add fuel to the conflict raging with Myer's largest shareholder Solomon Lew, whose Premier Investments intends to call a shareholder meeting to try to oust Myer's board.

Myer said it would not pay a dividend for the half.

Mr Hounsell said the search for a new CEO continued, and the company had interviewed a number of candidates.