Top retailers including Myer, David Jones are in for a major shock at the tills as profits continue on a downward spiral.High street stalwarts including Harvey Norman, who are to announce profit results for their first half this week, are said to show further losses in earnings as the online consumer boom continues to bite.
Even as early as last November, warning signs were emerging with its Chairman Gerry Harvey stating that his business was “not looking good” blaming it on price deflation of flat-screen televisions and growing competition from online rivals.
“You are going to see a pretty sizeable fall in profit for the six months that we are in now and I don’t know how that is going to go in the next year,” he said.
And this looks to follow through with UBS analyst Ben Gilbert now predicting Harvey Norman will suffer net profit falls as high as 12.6 percent when it reveals its full results on Friday.
Myer already suffered huge losses in sales of electronics goods in particular with total sales for the six months to January down 3.5 per cent.
Even discounting giant Big W and Dick Smith, both owned by the Woolworths group, have cut their profit guidance for the full year, reversing stronger growth predictions.
These losses comes as stores have been slashing prices and extending sales in a bid to lure consumers who have now discovered they can get cheaper deals at the click of a button.
And this is not all the bad news beleaguered retailers now face.
A retailers group, who late last year banded together to demand the government introduce a 10 percent levy on foreign goods ordered by online consumers, has now been dismissed by MasterCard as virtually impossible.
The retailers group, which was headed by Myer, Harvey Norman and Solomon Lew’s Just Group, insisted the lack of GST on foreign goods ordered under $1000 was creating an unequal playing field and claimed the levy could be easily implemented via credit card payments.
However, head of MasterCard Australia , Andrew Cartwright, has now dismissed this notion, saying “I think it would be difficult. Who is going to police this in terms of jurisdiction over foreign retailers?”.
“There’s hundreds of thousands of overseas-based online shopping sites, so it would be very complex to police all of these online shoppers,” he said.
And the federal government has already indicated it isn’t going to budge on GST.
Retail sales figures for December fell by 1.5 per cent according to the Australian Bureau of Statistics.