Myer shares crash to record low after new profit warning

Myer shares have plummeted to a fresh all-time low. Photo / 123RF

Myer shares have plummeted to a fresh all-time low after the department store chain warned it cannot see an end to the gloomy trading conditions that led to a steep drop in January sales and the need for more writedowns.

The troubled retailer said on Friday that sales fell by 6.5 per cent in the key January trading period, pushing total first-half sales down 3.6 per cent. The department store now expects net profit of between A$37 million ($39.8m) and A$41m — down from A$62.8m a year earlier — when it reports its first- half results in March.

But that excludes impairments the size of which it is still calculating. "Myer is currently undertaking an impairment assessment of the carrying values of assets on the balance sheet," Myer said in a statement to the ASX.

"Impairment indicators are in place, including the recent trading results, and we anticipate that there will be a non-cash impairment charge to be taken at the first-half 2018 result."

Shares in Myer fell to a fresh record low of 56.5 cents in early trade — down more than 50 per cent in a year — before recovering slightly. At 1145 AEDT, they were down 8.1 per cent at 59.25 per cent.

Myer has in the past six months announced stores closures, shed jobs and written down various investments as chief executive Richard Umbers' turnaround strategy struggles to gain traction against a backdrop of sluggish consumer activity and increased competition.

The company's 2017 full-year profit fell 80.3 per cent to A$11.9m, partly due to A$45.6m in writedowns against its investments in TopShop and sass & bide.

Myer on Friday said the uncertainty over the writedowns and trading conditions meant it cannot offer any full-year profit guidance.

Chairman Garry Hounsell acknowledged that shareholders — who include Premier Investments chairman Solomon Lew — would be disappointed by the performance and that he is continuing a review of all aspects of the business.

Retail veteran Mr Lew, who has been publicly critical of Myer since buying a 10.8 per cent stake in March 2017, this week demanded Myer's shareholder register in a move toward installing a new board.