Myer has upgraded its profit outlook for the second half of the year.
But its upgrade is based on a slow recovery in retail spending, and subject to no further downward pressures.
In a statement to stock exchanges, the country’s second major department store chain said the improvement in outlook was due to higher customer traffic and the second federal government stimulus package.
Myer said it notched up solid third quarter sales and that the trend was continuing into the fourth quarter.
It said it now expected sales for the second half of the year to be down around 1% compared with the second half of 2008.
This contrasts with previous guidance of a 5% fall in comparable store sales.
That was after first half sales fell 3.7%.
Myer, which is controlled by the TPG buyout group of the US, the Myer family and senior management, said it expects earnings before interest and tax, net profit and earnings per share for the full year to show a mid to high single digit increase on the same period last year, having previously given guidance that profits would be similar to financial year 2008.
Myer expects profits (Earnings Before Interest and Tax (EBIT), Net Profit After Tax (NPAT) and Earnings Per Share (EPS)) for the full year to show a "mid to high single digit" increase on the same period last year, having previously given guidance that profits would be "similar" to FY08 " the company said in the statement.
This should translate into EBIT of $220 million to $230 million in the year to July 25, against $213 million last financial year, and a profit of around $103 million against $95 million.
In the 2008 financial year, Myer reported sales of $3.32 billion, up 1% on $3.289 billion booked in the previous year.
The retailer said Western Australia and Queensland were the best performing regions earlier this year, however in recent months Victoria, New South Wales and South Australia have traded very well to contribute to the solid national result. South Australia in particular produced standout results largely due to improved store presentation.
Myer Chief Executive Officer Bernie Brookes said, "Cosmetics, womenswear and accessories continue to be the strongest performing categories, while menswear and electronics have improved and traded well in recent weeks.
"In the context of a challenging economic environment and volatile consumer confidence, we will continue to manage our business cautiously.
"However, given our solid third quarter sales performance and assuming we do not experience any material deterioration in trading conditions during the remainder of the fourth quarter, we anticipate that our full year sales will be down approximately 2½%.
"Sales during the Myer Mid Season Sale in April were higher than last year, and customers are continuing to respond positively to significantly improved in-store presentation and planned promotional activity.
"We have also observed a greater impact from the second Federal Government stimulus package, particularly in many of our suburban and regional stores," said Mr.Brookes.
Myer said that its first promotional program, Project Bullseye, aimed to coincide with the traditionally softer trading months of February, March and April had worked.
"Participating suppliers reported a sales improvement of between 2% and 14% compared to those who did not join the program. A similar promotion will be run in future years, but the style and format may change.
"Myer strengthened its commitment to local community marketing and events during the last year, with more than $1m in local funding now available for community events.
"This strategy to bring Myer to more people and engage with Australians at a grassroots level proved popular with customers and delivered positive results during the year.
"Myer’s commitment to the communities in which it operates was also evident in the company’s support for the Victorian Bushfire appeal, with $2.7m raised for the Salvation Army.
"Despite the challenging trading environment, the Turnaround Phase of the Myer business remains on track.
"We are 37 months into a 50-month turnaround and our focus has been to improve our customer service and the presentation of our stores, increase our return on sales, drive operational improvements and invest in our store portfolio.
"The building blocks for the Growth Phase are progressively coming into place", Mr Brookes said.
Myer said in the statement it will announce its results for the year to July 25 2009 in late September.
