The grand plans that Myer entertained on the eve of its float — that it would have 100 department stores by 2020 — were snuffed out by new chief executive Richard Umbers yesterday as he unpicked the spluttering empire built by his predecessor Bernie Brookes.
Unveiling what is expected to be the first round of store closures, Myer will shut down stores in Sydney and Melbourne, with the loss of up to 82 jobs.
Mr Umbers has begun reshaping the retailer to better cope with the harsh realities of the trading environment that now seems a world away from the heady days of 2009 when Myer listed on the stock exchange to the promise of growing profits underwritten by an aggressive store rollout.
The decision to close its Top Ryde City store in NSW, as well as three small stand-alone specialty stores in Melbourne, marks the first major strategic decision by Mr Umbers, who replaced long-serving Mr Brookes in early March with the promise of driving through a company-wide review to revive the group’s sales and profits that have hardly budged in two decades.
It is the first major pivot away from Mr Brookes’s ambitious growth plans, as the retailer now faces intense competition from an influx of overseas retailers, such as fast-fashion juggernaut Zara, Swedish department store H&M and Japan’s Uniqlo, as well as the continued strength of online retailing.
Investors now await the outcome of Mr Umbers’s review, which is expected to be presented to the market in the second half of the year, but many expect the former Australia Post executive to radically shrink Myer’s present network of 67 stores as it slims down to better compete and finally deliver earnings growth to shareholders.
Some analysts believe Myer could be left with a store network closer to 50, which would trigger a huge round of job losses as well as hundreds of millions of dollars in lease termination payments to shopping centre landlords.
It’s a long way from the bullish days leading up to Myer’s $2.3 billion float in November 2009 when Mr Brookes, flanked by his fellow board members and then store ambassador and model Jennifer Hawkins, said Myer would open 15 new stores in its five years as a public company followed quickly by a further 20 stores to take the total Myer footprint to 100 by 2020.
This was to be the bricks-and-mortar platform for growth after the retailer was bashed into shape by its private equity owners before being flipped to the general public.
“We believe Myer’s best is ahead of it,’’ Mr Brookes said at the time.
Now, with sales flatlining, shares at record lows and the retailer issuing a profit downgrade for 2015, Mr Umbers seems intent on fashioning Myer into a department store with a much smaller footprint.
The decision to close Top Ryde City was guided by a review of shopping data linked into its Myer One loyalty program.
“We have recently undertaken an extensive analysis of our current and future customer base, on a catchment-by-catchment basis that now informs our decision making,” Mr Umbers said.
Over the past 12 months Myer has been trialling three stand-alone stores in Epping, in Melbourne’s north, which stocked Myer exclusive and private label brands in womenswear, men’s wear and childrenswear. These stores will close in August as Myer focuses on its core Myer business.
Commonwealth Bank retail analyst Andrew McLennan said Myer now had the challenge of also cutting away its bloated supply chain and logistics operations that had been built up over the past five years to service a much bigger store network.