Myer sales growth slows

Retailers still doing it tough

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published May 22, 2013 9:36 am AEST

Department store owner Myer Holdings (ASX: MYR) has reported a slight rise in sales for the quarter to March 31, and remains cautious about the outlook for retail trading.

Third quarter sales rose 0.5% to $652.5 million – the company's fourth consecutive quarter of comparable sales growth. Key categories of menswear, cosmetics, womenswear and childrenswear were again the strongest performers during the quarter.

Myer opened one new store, and said it had seen a positive response from customers. Earlier in May, the company launched a new premium platinum tier for its most highly valued Myer One loyalty card members. The top 2,000 customers were invited to join the program, which offers exclusive rewards and experiences.

Loyalty programs can pay big dividends for retailers, Kathmandu Limited (ASX: KMD) has previously reported that more than half of its sales are to members of its loyalty club. Around 70% of Myer's sales are to its Myer One cardholders.

Myer's recent success may be partly to blame for the lack lustre results Wesfarmers Limited (ASX: WES) is experiencing in its discount department store, Target. While Wesfarmers' Kmart competes on a similar level to Woolworths' (ASX: WOW) Big W at the discount end of the market, and Myer roughly competes against the more up-market David Jones Limited (ASX: DJS), Target is really in no-man's land. Wesfarmers faces a tough time trying to turn around Target.

Retailers across the board are still facing a difficult environment, and Myer's third quarter sales growth at 0.5% was much lower than its second quarter sales growth of 2.1%. The retailer continues to focus on what it calls its 'omni-channel' offering, which allows customers to buy products through several different mediums, such as traditional bricks-and-mortar stores as well as online and mobile.

Foolish takeaway

While its pleasing to see positive sales growth, the slump from the previous quarter may be cause for concern, and shareholders will be closely watching the final quarter's sales figures.

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