Department store Myer has recorded a five per cent drop in sales in the first fortnight of December – during what should be one the busiest pre-Christmas shopping periods.
Myer pointed to ‘reduced foot traffic, widespread industry discounting and subdued consumer sentiment’ for the sales slump during a statement to the Australian Securities Exchange.
On Wednesday, the retailer further revealed that sales in the three-month period between August and October were down 2.1 per cent, while November profits were down 1.8 per cent.
Myer announced a sales slump of 5 per cent for the first two weeks of December this season
Online sales from the Myer site have soared by 62 per cent in the first two weeks of December
‘Trading during the past two weeks has been significantly below our expectations and the year-to-date run rate, and while there is an additional weekend of pre-Christmas trading this month, we do not know what the sales impact of that will be,’ Myer chief executive Richard Umbers told news.com.au.
However, he did reveal that online business sales had soared by 62 per cent, and while the only sale growth was not enough to entirely offset subdued in-store trading, Mr Umbers said that it was a good indicator of investment in the ‘right areas’.
Myer has been warned that the ‘recent trading environment’ means that the profit shortfall is highly unlikely to be recovered between January and June 2018.
Another statement released by the retail giant explained that a ‘significant’ portion of annual profit is generated during the second quarter (October-December) and that the month of December often gives up to 25 per cent of yearly profits.
People are not flocking to Myer stores as they did last year (left) but are shopping online (right)
Sales profits leading into Christmas are lower than last year in most retail stores – not just Myer
‘Given the recent sales volatility and considering the magnitude of sales expected in the coming weeks, Myer does not have a reasonable basis to provide a specific profit range for the half or full year at this time,’ the statement clarified.
But it’s not just Myer that’s facing hardship – Citi analysts warned earlier this week retail sales conditions leading into Christmas were tracking between 2-4 percentage points slower than the same time last year.
‘The signs are not great because the lead-up has been soft, discounting has been pulled forward and there are few ‘must-have’ items this year,’ said analyst Craig Woolford.
Christmas sales for many stores have been unusually slow in the first two weeks of December
With the release of ‘Star Wars: The Last Jedi’, sales volumes could be given a ‘kick’ upwards
He pointed to Harvey Norman, JB Hi-Fi and Premier Investments, as well as Myer, as being hit the hardest by a soft lead-up, forward discounting and lack of a ‘must-have’ item to rival the 2016 Hatchimals craze.
However, with the December 14 release of ‘Star Wars: The Last Jedi’, sales could be given a ‘kick’ with merchandise tie-ins, Mr Woodford speculated.
Citi’s picks for the hottest gifts of 2017 including Star Wars Lego, the L.O.L. Surprise, Call of Duty: WWII, Google Home, Xbox One and wireless headphones. Also popular are Aesop personal care products, tri-fold wallets and pompom keychains.
Daily Mail Australia has reached out to Myer for comment.
Experts have said that this season does not have a ‘must-have’ toy, such as the 2016 Hatchimal