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Myer continues to be subject to chilly trading conditions as sales suffer 1.7% fall.

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It figures for first six month of fiscal 2012 to January 28 show pre tax earnings of $142.9 m – down 15.1%.

H1 sales were down 1.7% to $1,704m – or 3% on a comparable store basis, while second quarter sales fell 0.4% to $1,023 m.

Net profit after tax  was also down 19.8% to $87.3m, included one-off costs of around $17 million (including Melbourne store build) and a $5 million increase in depreciation.

However, both of these not repeated in second half of the year, Myer said today.

The best performing categories across Myer store network were (Youth), Womenswear,Childrenswear and Cosmetics. Overall, the best performing states were Western Australia and South Australia.

Electrical sales fell $22 million in H1, impacted by planned category exits in consoles, gaming and rationalisation in white goods, music, DVDs and navigation systems, which it is replacing with higher margin categories.

Myer said it was making “good progress ” on exist of consoles and gaming categories.

Strong sales in Appliances and Home Office sectors partially offset the ongoing significant price deflation in TVs.

“Appliances and Home Office continue to perform well. The current market conditions relating toTVs, music and DVDs reflect a saturated and competitive market with significant pricedeflation,” CEO Bernie Brookes said.

“The planned rationalisation of these categories is nearing completion and we anticipate further improvements to profitability with the more productive use of space.

The department store admitted “challenging trading environment” but says there there continues to be “a number of opportunities” to improve business including omni-channel offer, markdown management, further shrinkage reduction, benefits from our sourcing offices, improved store lease terms, MYER one program.

Myer is also continuing its investment in improving customer service spent an additional $13m during the six months.

 

Cost impacts during the half were driven by increase in depreciation to $40 million as a result of the completion of major capital projects, new point of sale systems, Myer Melbourne rebuild and new IT hardware and update stores.

Myer also reconfirmed full year net profit guidance, predicting it will to be “no worse” than ten percent below 2011 figure of $162.7 m, meaning subdued trading growth is ahead.

“Recognising Myer’s continued strong cash generation and stable balance sheet, the Board has declared an interim dividend of 10 cents per share,” Brookes said.

The store’s net debt increased by $46 million to $298 million compared to January 2011, primarily due to the impact of the sass & bide acquisition.

Myer says it continues to be “very well placed” to benefit from any improvements in discretionary retail conditions when they occur.

Dont hold your breath, Bernie.

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