Ailing department store group Myer revealed late on Friday that sales for the first quarter of 2018-19 had plunged by 4.8 per cent as it belatedly responded after a day of high drama when its shares were forced into a trading halt by the ASX.
Myer said in a statement to the ASX that comparable store sales were 4.3 per cent below the same quarter last year, confirming that the downward momentum which has alarmed investors was a reality, although it reiterated that new chief executive John King’s strategy was not to chase unprofitable sales.
The company said an Australian Financial Review article which had prompted a trading halt contained “unlawfully leaked, draft and incomplete financial information taken from an unapproved internal document relating to part of the Myer business”.
Myer also said that total online sales grew by 3.6 per cent during the first quarter.
Billionaire retailer Solomon Lew said earlier he was “not surprised” that Myer had stumbled again, after the group was forced into a trading halt by a furious ASX compliance unit as concerns mounted in the market that a downward spiral was worsening.
Veteran fund manager Geoff Wilson took a potshot at Mr Lew at a Melbourne investment conference amid simmering tensions between the two. Both have a lot at stake as Myer grapples to find any traction as the department store business model looks increasingly challenged around the world.
Myer chairman Garry Hounsell tried to reassure investors in the third statement by Myer late on Friday. “Myer has solid cash flows and has reduced net debt by $7 million compared to the previous corresponding quarter,” Mr Hounsell said.
“Myer is well aware of its continuous disclosure obligations and confirms it is compliance with them”. Myer said that a bottomline loss for the first quarter was an improvement on the same time a year earlier when one-off costs were stripped out. It didn’t specify the size of the loss. It also said that trading during the second quarter represented the most important contribution to Myer’s full-year profitability.
Shares in Myer were forced into a trading halt by the ASX’s compliance unit on Friday in the wake of a report in The Australian Financial Review’s Rear Window column that sales had fallen significantly in the first quarter of financial year 2019.
Myer shares were issued at $4.10 in a public float of the business in 2009 and are now trading at almost one tenth that level despite several attempts at a resurrection, the latest by new chief executive Mr King who took the helm in June.
Mr Lew, who holds a stake of 10.8 per cent in Myer which has halved in value since he acquired it in early 2017, has been waging a long campaign to try to oust the Myer board, arguing that the company has lost its way.
Mr Lew attended the Sohn Hearts and Minds investment conference in Melbourne on Friday, and asked for his reaction to the reports of a sales fall at Myer he said simply: “I’m not surprised.”
Myer’s shares closed down 3.2 per cent on Thursday at 45¢ and have plummeted 43 per cent since touching a 52-week high of 78¢ on November 30 last year.
Mr Wilson, whose Wilson Asset Management funds hold a combined 5.5 per cent of Myer after building a stake since early July at low prices, began his presentation at Sohn saying he wouldn’t talk about Myer. But spotting Mr Lew in the audience, Mr Wilson told his fellow Myer shareholder that at least Wilson Asset Management’s average entry price was lower than his.
Later, Mr Wilson said it was too early to make assumptions about whether Myer could make improvements under Mr King. “We know department stores are struggling. And we can assume retail is difficult, fuel prices are up and house prices are lower,” Mr Wilson said. “Our question is can John King turn around the fortunes of Myer. It’s still very early to make any assumptions.”
The ASX compliance unit was annoyed at a vague statement released by Myer earlier on Friday to the ASX, which didn’t address the specific information in the article. Rear Window reported that Myer’s group sales for the three months ended October 31 had fallen 5.5 per cent year-on-year, while online sales rose 41 per cent against the same period two years ago, yet were down 5.2 per cent on the previous corresponding period.
It is understood there was a series of phone calls between the ASX and Myer over the issue, with the ASX deeming the Myer response inadequate and leaving investors uninformed and in an information vacuum. The ASX insisted that Myer go into a temporary trading halt pending more specific information being released.
Just over two hours later, a further update was supplied by Myer’s general counsel and company secretary Jonathan Garland, saying that Myer had now requested that the trading halt stay in place prior to the opening of ASX trading on Monday.
“The reason for the request is to further respond to the article contained in today’s [Friday’s] [The] Australian Financial Review commenting on the company’s financial performance.”
“The trading halt is requested until an announcement is made to the market, which is expected prior to the opening of trading on Monday 19 November 2018,” the second Myer statement said.
The initial trading halt enforced by the ASX came 45 minutes after an original announcement from Myer early on Friday in response to the Rear Window article that it was “well aware of its continuous disclosure obligations” and “confirms it is in compliance” with them.
Mr Lew, who is Premier Investments chairman, has been pushing for the beleaguered retailer to release first-quarter sales to the end of October urgently. He has argued shareholders must be fully informed before the Myer annual meeting due to take place November 30, where they will vote on Myer’s remuneration report and the re-election of directors.
Myer, which has a July year end, has previously released first-quarter sales at its annual meeting. However, it said in May it would no longer provide quarterly sales updates, mirroring Wesfarmers’ move away from quarterly reporting.