Myer has announced its first store closure since unveiling plans to cut its store footprint by up to 20 per cent as part of its $600 million turnaround strategy.
The closure will put up to 100 jobs at risk, but Myer’s decision to keep the store open until January next year is expected to reduce the total job losses through natural attrition and some “redeployment”.
In September, Myer revealed it would focus its investment on premium or flagship stores in the network, which accounted for just 23 of the 67 stores at that time.
The remaining 44 stores were categorised mainstream or community and analysts expected these stores would be downsized or closed in the course of Myer’s five-year transformation plan.
Retail insiders suggest Myer needs to close as many as 20 stores to achieve the productivity gains to compete with arch rival David Jones and its runaway sales growth.
David Jones reported comparable store sales growth of 9.7 per cent for the 26 weeks to December 27. By comparison Myer’s sales grew by 3.9 per cent on a comparable basis for the first quarter of fiscal 2016.
The closure of Myer’s Brookside store will reduce its network to 66, and there are more store closures on the horizon, with Myer insiders revealing talks were under way with its major landlords.
These negotiations are complicated by the fact that Myer has multiple leases with big retail landlords such Scentre Group and Vicinity Centres.
“For a lot of the landlords these negotiations are across an entire portfolio,” one retail insider said.
Myer chief executive Richard Umbers shut down Myer’s Top Ryde City store in June last year, which was one of the first new store openings after the department store’s $2.3 billion float in 2009.
Mr Umbers, who took over from Bernie Brookes 12 months ago, said the decision not to renew the lease at Brookside was consistent with the productivity “step-change objectives of the New Myer strategy”.
“While the lease is due to expire in September this year, we will continue to trade through the Christmas and stocktake period to minimise the disruption to team members and customers,” Mr Umbers said.
He said the reshaping of Myer’s store footprint was about aligning the network with the department store’s “primary customer groups”.
Myer has shut down six stores in the past three years when leases expired, and scrapped plans for three new outlets.
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