Myer shares dive after it's forced to reveal weak sales figures
Troubled department store Myer's shares dropped as much as 15 per cent in early trading on Monday as investors digested the weak sales figures it was forced to disclose on Friday.
However, most of the fall - from 45¢ to 38¢ - occurred in the first four minutes of trading and the stock recovered much of that ground by 1pm, to be down 5.5 per cent at 42¢.
Myer said in May it would stop providing quarterly sales updates, sparking outrage from its insurgent major shareholder, Solomon Lew's Premier Investments, which said investors needed the information to decide how to vote at Myer's annual general meeting later this month.
On Friday, the The Australian Financial Review reported what it said were Myer's internal first-quarter gross sales figures showing a 5.5 per cent year-on-year decline, with online sales falling 5.2 per cent.
Myer brushed off the report but the ASX's disclosure team forced the department store into a trading halt until it responded more thoroughly.
After the market closed on Friday, Myer said its total sales had fallen 4.8 per cent in the first quarter, while online sales had grown 3.6 per cent.
The company said the first quarter was generally loss-making, but that its losses this year were lower than in the prior corresponding period.
Daniel Muller, a portfolio manager at Vertium Asset Management, said this claim would not provide investors with much confidence without it releasing firm profit figures.
“Particular the way it's been disclosed - it’s not a great look," he said. “The rhetoric from the current management team is that they’re doing what any retailer should be doing anyway - trying to move away from unprofitable sales.
“The first quarter is not particularly important for a discretionary retailer - the second quarter and Christmas sales are the key - so it’s hard to read too much into the numbers, but they do look very weak."
Citi analyst Bryan Raymond said the December sales period would be "the first test of Myer’s discipline around winding back discounting given the number of key sale events".
That would be especially challenging if key competitors such as David Jones continued to use margin-eroding discounts to drive sales, he said.
David Jones last week reported 2.9 per cent gross sales growth (versus Myer's 4.8 per cent decline) in the first quarter, with online sales up 48 per cent from a year ago (versus Myer's 3.6 per cent) to account for 5.2 per cent of total sales.
Myer's online sales accounted for 7.7 per cent of total sales last year.
"We think it’s possible David Jones is not winding back promotions if it is delivering strong growth, which could impact the success of Myer’s profit-driven strategy," Mr Raymond said.
Myer has been suffering from falling sales and earnings and its shares hit a record low of 34ȼ in May.
Premier Investments, which owns about 11 per cent of Myer, is pushing to have the company's board tipped out at its annual general meeting on November 30.
Most Viewed in Business
Please explain
Our weekly podcast giving you insight into the stories that drive the nation.
Listen now