Myer, the country’s biggest department store group, has reported its second consecutive quarter of less than par sales growth as the caution evident among consumers continues.
The slump in the three months to the end of last month has forced the retailer to abandon plans to end deep discounting and aggressive sales strategies used in the closing months of the 2010 financial year
Those plans were announced in September when the retailer revealed its 2010 profits.
That was after 4th quarter sales fell 1.4% on a top line basis and 0.9% on a like for like (or same store) basis.
But at Friday’s AGM, the retailer revealed that sales in the September quarter had continued to fall.
Myer said sales for the first quarter to October 30 fell 1.53% on a top line basis and 1.74% on a same store basis.
Excluding the impact of the Myer Melbourne refurbishment, same store sales were down 1.31%.
This compares to a year ago when the federal government stimulus spending helped boost sales by 5.2% in the first quarter.
CEO Bernie Brooks told reporters after the AGM on Friday that the retailer was unable to reduce its mark downs in the first quarter as its competitors maintained their price cutting, especially last month.
That came after solid sales in the first two months of the quarter when the company’s planned reduction in discounting seemed to work.
‘‘We achieved it in the first two months but then in October as business got pretty difficult we were aggressively spending on mark downs so the answer is we are going to continue to aggressively chase the consumer,’’ Mr Brooks said.
He also said Myer’s sales were hurt by poor weather conditions, the rise in interest rates as well as the strong competition in the retail sector.
"The entertainment category was also hurt by price deflation, an issue also highlighted by Harvey Norman and Woolworths, with large screen televisions especially down on price," Myer said in its ASX statement.
"Home (in particular furniture), women’s accessories, menswear and youth apparel performed strongly during the first quarter offset by relative weakness in the Entertainment category which was the largest beneficiary of last year’s Federal Government stimulus spending.
"During Q1FY11 the Entertainment category was particularly impacted by price deflation especially in large screen televisions. Excluding Entertainment, sales for the group were up 0.10% on the previous corresponding period.
"The strongest performing states were Victoria (excluding Myer Melbourne) and Queensland.
"Sales for the remainder of 2011 will benefit from a number of key growth initiatives including two new stores, the return of Myer Melbourne after a total rebuild and the impact of two refurbishments," he said.
Myer shares closed down one cent on Friday at $3.88.
Shares in Primary Health Care Ltd rose on Friday despite yet another profit downgrade.
The shares ended up 17c, or more than 5.5%, at $3.22 on Friday after touching a day’s low of $3.05.
That was just 5c above the lowest price reached for more than five years of $3.00 last Monday.
The rise was a surprise, given how the market hates underperforming shares at the moment. (See the way Programmed Maintenance Services was treated last week when it produced a surprise earnings downgrade: the shares plunged 40% at one stage and unlike Primary, its managing to maintain a steady dividend.)
Primary now has had two or three warnings of a profit fall and is also slashing its payout dramatically and incurring millions more of costs in a revamp to try and boost earnings next year.
The Sydney-based medical centres operator and pathology provider said on Friday earnings before interest, tax, depreciation and amortisation (EBITDA) for the current year are now expected at between $330 million and $340 million.
It was the second downgrade in four months, after the company said at its full year results in August it expected EBITDA of $360 million in 2010-11.
This itself was lower than the original forecast of between $360 million and $380 million.
The latest forecast doesn’t include the estimated $34.7 million cost of a restructuring plan revealed on Friday which will see 23 sites closed and 209 jobs axed.
Primary also flagged a reduced half-year dividend of 3c per share fully franked, compared with 15c per share in the prior corresponding period.
That’s a big cost and will impact the Bateman family which are still big shareholders.
Primary managing director Ed Bateman said in a statement on Friday the cost reduction program was in response to government funding cuts across the healthcare industry.
"The current funding and regulatory environment requires healthcare providers to make increasing efficiency gains to maintain service levels to patients and practitioners," Dr Bateman said.
Primary said it had already cut about half the 290 jobs earmarked to go, with the majority of losses coming from the pathology division.
The company said it expected to spend $26.9 million on staff redundancy and lease obligations,
