Despite recording a dip in first quarter sales, Myer boss Bernie Brookes says early sales of Christmas decorations, toys, hampers and cosmetic gift packs were very positive with some festive season gift categories reporting double digit growth.
‘‘What we look at firstly is toys, and they are up on last year, we then look at Christmas trimm, we then look at cosmetic gift packs and fragrance packs, hampers, and all of those are up from a couple of per cent to double-digit growth,’’ he said, giving the retailer greater confidence this Christmas could be better than expected.
Mr Brookes said this time last year the department store owner was already engaged in discounting Christmas decorations following a rate rise on Melbourne Cup day and increasingly grim economic news that depressed consumer confidence.
Speaking this morning after the release of Myer’s first quarter sales results, which saw its like-for-like sales fall 5.1 per cent in the first quarter, Mr Brookes said November sales of Christmas related products were typically a good leading indicator about the strength of sales in December.
‘‘It’s a bit like getting early polls on an election so it can be a good read, but it depends on where the other polls come in.’’
He said he was very pleased with early sales heading into Christmas.
‘‘I hope that is a precursor to a much improved Christmas and you can only look at the early signs.’’
Myer had forecast a flat Christmas in terms of its own sales with any improvement on that position upside for the company. Mr Brookes said Myer was not relying on a bumper Christmas trading period to hit its sales and earnings forecasts for 2011-12.
Earlier today, Myer reaffirmed its profit and sales guidance for the full year despite continued tough trading conditions in the retail sector.
Myer announced to the market this morning that total sales for the thirteen weeks to October 29 fell 3.5 per cent to $681.4 million.
The company said that sales excluding its rationalised electrical categories including whitegoods, movies and music, gaming consoles and GPS were down only 2.7 per cent on the prior period.
"Our decision to rationalise our electrical offer continues to impact sales, however these decisions are expected to result in sales from higher margin categories as floor space is reallocated,'' the company said in a statement to the Australian Securities Exchange.
Myer said during the first quarter the key categories of womenswear and youth continued to be the strongest performers.
Myer said global and domestic economic conditions would dictate when consumer confidence returned to more normal levels but despite the 5 per cent fall in comparable sales for the first quarter Myer was sticking to its earnings guidance.
The company said its guidance remained unchanged, assuming no deterioration in trading conditions, with Myer forecasting 2011-12 sales to be flat and net profit to be up to 10 per cent below 2010-11 of $162.7 million.
Myer chief executive Bernie Brookes said that as the first quarter progressed sales had gradually improved against last year.
He also welcomed the interest rate cut announced last week by the Reserve Bank which should help trading as retailers head into the crucial Christmas trading period.
Myer is the first department store to report its first quarter sales results with arch rival David Jones to soon report its trading performance. Last month Woolworths and Wesfarmers released the first quarter sales figures for their respective discretionary retail chains (Big W, Dick Smith, Target and Kmart) with these retailers also suffering from declining like for like sales.
Mr Brookes said as part of Myer's push to become a leading multi-channel retailer, the first phase of its website rebuild was underway with online sales continuing to grow. Customers had responded well to Myer's offer this year of free delivery on most merchandise.
The announcement comes a day after Westfield, the world's biggest shopping centre landlord by value, reported a 0.1 per cent rise in sales in Australia for the year ending September 30, but the past three months saw a 1.7 per cent drop.
The figures were closed off before the November 1 cut in Australia's official interest rates, which is expected to give retailers a boost in the Christmas trading period.
Despite the poorer sales, mainly from department stores, Westfield reaffirmed its full year distribution per security at 48.4¢ and operational earnings of 74.6¢ per security.
egreenblat@theage.com.au
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