Department store Myer has delivered a threadbare full-year profit of just $11.9 million as top-line sales slipped and the company was forced to take a knife to a number of investments.
The result was 80 per cent down on last year's profit, while underlying earnings — excluding one off gains and losses — of $67.9 million dropped 2 per cent and fell short of analyst expectations.
Sales revenue fell 1.4 per cent to $3.2 billion, however it was a number of impairment charges that really ravaged the bottom line.
The recently acquired sass & bide fashion range again recorded disappointing sales and its book value was written down by $39 million.
Myer has also written off the entire value of its $6.8 million investment in Australia, which operated the Topshop chain and was put into administration in May.
Myer chief executive Richard Umbers said it was disappointing to have hit the target of beating last year's underlying earnings and that progress against key measures was slower than anticipated.
However he said a number of initiatives — such as store closures and investments in online sales — had made Myer leaner and a more efficient retailer.
"We have made significant progress to deliver New Myer, which as assisted the company to withstand the challenging retail trading conditions characterised by heightened competition, subdues consumer sentiment and discount fatigue," he said.
Department stores have been the most brutalised sector within retail by tumbling consumer sentiment with ABS figures showing sales having fallen in 11 of the past 13 months.
|Myer FY results
|Net profit after tax
More store closures
Myer has accelerated its downsizing announcing it would not be renewing leases at Hornsby, Belconnen in the ACT and the Colonnades centre in Adelaide on top this year's closure of three stores at Orange, Brookside and Wollongong.
In addition it has handed back floorspace to landlords in another four stores.
That brings the total loss of space in the past two years to almost 7.5 hectares — or the equivalent of four MCGs.
However Myer appears to be gaining traction in its online sales, which grew by more than 40 per cent and now represent 8 per cent of all sales.
Mr Umbers noted the first six weeks of the 2018 financial year have also been below expectation, but the company was well placed to pick up in the significant spring racing and Christmas trading periods.
"[The] consensus for underlying net profit after tax in 2018 of $66 million already factors in a subdued start to the year," Mr Umber said.
It also signals the market expects another year of lower profitability.
Myer will pay a full-year dividend of 5 cents a share, the same as last year but slightly lower than expected.
Investors were relieved that things were not worse and at 11:30am (AEST) share were up almost 3 per cent to 74 cents.