But he said the group was still confident “in the continuing momentum we have” as it executed on its strategy of putting customers first.
Myer shares gained 5.9 per cent to 90¢ by 11am AEDT. Analysts say categories such as womenswear, footwear and fashion accessories have been strong in retail as events on the social calendar were held again after many were cancelled during the first years of the pandemic. Beauty products, homewares, and appliances such as coffee machines and juicers have also been strong.
Australia’s biggest department store chain said trading from its stocktake sale period was outperforming the previous year when the omicron variant caused a substantial downturn to foot traffic in bricks-and-mortar outlets.
First-half net profit – July 31 to January 28 – is expected to total between $61 million and $66 million, up at least 89 per cent on the previous period, Myer’s trading update to the ASX said.
Profits are also projected to be significantly higher than before the pandemic, up between 54 per cent and 67 per cent on the first half of 2019-20.
Online sales fall
Online sales in August-December fell 9.4 per cent from a year ago, an indication of how strong online sales were in 2021 when stores were closed because of COVID-19 and customers cautious to return into stores upon reopening. Online sales account for 20.1 per cent of total sales.
The change in shopper behaviour was also apparent at online retailer Kogan.com, which on Tuesday announced that sales for the December half were down 32.5 per cent to $471 million compared with a year ago when it was a big beneficiary of COVID restrictions and lockdowns.
Chief executive Ruslan Kogan said inventory levels at the group had been cut hard to $98.3 million, from $160 million at June 30. He believes Kogan.com’s value proposition will help it in the next few months as cost-of-living increases hit households. “The impacts of inflation and interest rates have begun to affect the lives of Australians and New Zealanders,” Mr Kogan said.
In another comparison with the pre-COVID-19 landscape, total sales at Myer jumped 18.9 per cent on the first half of 2020, and climbed 14.3 per cent on the same period in 2019.
Department store total sales for the six weeks ended December 24 rose 8.7 per cent higher from the year-earlier period.
Myer’s big rival, David Jones, on January 19 said sales rose 2.3 per cent in the last six weeks of the key Christmas trading period, underpinned by a strong Black Friday and shoppers returning to physical stores.
The chain’s soon-to-be-former owners, South Africa’s Woolworths Holdings, said sales, including concessions, increased more than 31 per cent in the 26 weeks ended December 25 at David Jones, with its CBD locations bouncing back to life. Same-store sales gained 27.6 per cent in the half.
Australian consumers will start clamping their wallets shut soon, as pressures from higher interest rates, falling house prices, negative real wages growth and higher inflation puts the brakes on what has been a buoyant 12 months for the retail sector, Deloitte Access Economics said on Sunday.
Big retailers have so far defied negative predictions from economists and analysts. But Deloitte Access Economics partner Stephen Smith said the good times in retail were coming to an end, and a crunch imminent. The lead-up to Christmas, and post-Christmas sales were the last hurrah.
“That’s essentially the peak in real terms,” he said on Sunday. “For lower income households it is starting to bite.”
Transactions data on credit cards, viewed in the industry as the most up-to-date measure, already show a slowing in spending.