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MYER'S (ASX: MYR) full year profit will be largely wiped out because of weak trading conditions and the struggling performance of two major brands.
The Melbourne based retail group anticipates its $60.5 million expected full year net profit will be now between $66 to $70 million, but that will be hit by $20 million in costs and a loss of $45.6 million from two brands under the Myer umbrella.
The group announced today it will take a total $45.6 million hit after writing off the value of its stake in TOPSHOP TOPMAN's Australian franchisee Austradia and suffering a $38.8 million impairment charge because of sass & bide's poor performance.
Myer currently holds a 20 per cent interest in Austradia, the Australian franchisee of TOPMAN TOPSHOP, who appointed administrators in late May.
Myer today announced the decision to write down the value of its stake in Austradia valued at $6.8 million.
The group also confirmed it has been unable to secure a deal with the UK based owner of TOPSHOP to allow for the continuation of concessions in Myer.
The poor performing sass & bide will hit Myer the hardest, with an impairment charge of $38.8 million despite Myer's "every effort" made to revive the struggling brand.
Myer Chief Executive Officer, Richard Umbers, says the group will be responding to the changing retail climate following these setbacks.
"We are responding to the challenging external environment in a way that preserves the integrity of the New Myer strategy that is built around customer service, engaging retail experiences and wanted brands, while continuing our focus on efficiency and productivity," says Umbers.
Both the TOPSHOP write off and the sass & bide impairment charge will be taken as individually significant items in Myer's 2017 full year results.
The Melbourne retail group also announced the departure of Chief Merchandise and Customer Officer Daniel Bracken from the company after two and a half years of service.
Following the announcements on Thursday, MYR shares tumbled nearly 10 per cent to $0.74.
Myer shares have fallen almost 50 per cent since August last year, wiping more than $600 million off its market capitalisation.
Business News Australia
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