Myer in Australia suffers profit slide

Australian department store Myer has suffered a 22% profit slide, but expects the year ahead to improve as recent store refurbishments help lift sales.

Myer made a net profit of A$98.5 million (US$86.3 million) for the 12 months to July 26, down from A$127.2 million a year ago.

Total sales for the year were virtually flat at A$3.14 billion. Myer blamed the result on refurbishment at four stores and the closure of two others.

CEO Bernie Brookes said the completion of the refurbishment work should help lift sales during the 2015 fiscal year. “As expected, our investment in the business during the year adversely affected profitability, however, we look forward to the benefits beginning to be realised in FY2015,” he said.

The retailer also expects to grow its online sales and is rolling out iPads for customers to use across its stores. It says the iPads will give customers access to an expanded range of products.

Myer is also working to improve its profit margins through improvements to its supply chain and the growth of its exclusive brands.

Meanwhile, Brookes has also voiced his preference for a system in which Myer staff would be paid according to what they sell, rather than the rates set down in their workplace agreement. He said a more “laissez faire” industrial relations environment would help the department store lift its customer service and sales.

US retailers like Nordstrom and Neiman Marcus, which are well-known for their customer service, pay their workers a base salary plus a percentage of sales, which provides an incentive to sell more.