My, oh Myer, everything suggests the department store's half-year result on March 15 is going to be ugly. Recent talk around the campfire has been dead right on the department store group so far, so we'd bet the house that it will be a catastrophic set of sales figures chief executive Richard Umbers presents on Thursday. It can't be a great sign when its largest shareholder, Perpetual, offloads more than a quarter of its holding in line – as it did on March 2.
Myer upped its FY17 profit guidance in November after a strong first quarter, but then failed to clear its stock in January. On the whole, it was a shocking summer for Australia's discretionary retailers. David Jones last month reported a collapse in its sales growth for the first half and that it would divert $100 million of capital into its gourmet food play. DJ's interim result includes the week from Boxing Day, but Myer's includes all of January too.
One might ask why, in the fortnight before a hotly anticipated set of sales numbers, and right before the company announced it was outsourcing "at least" 50 jobs (the number is closer to 100), was Umbers out there on a publicity drive? Even on Tuesday, 48 hours before the result, Myer was touting its new food strategy. Strange, much?
Umbers' saving grace will be that, even though the sales figures will be impossible to dress up, the company has $94 million of write-down provisions on its balance sheet where it can stash its failure to clear stock.
It feels like we've seen this play before. Remember November 2014, when Woolworths then chairman Ralph "Muddy" Waters confirmed bullish guidance at the supermarket giant's annual meeting, then downgraded it in January after a self-fulfillingly dreadful Christmas (due to labour hours being yanked out of stores to help meet that guidance). The company then spent the rest of 2015 drawing down on write-down provisions. Is history repeating?
