By Aimee Chanthadavong

Department store giant Myer has reported a 3.5 per cent drop in sales to $1,733 million compared to $1,797 million from the previous corresponding period.

But despite the fall, CEO Bernie Brookes has described the results as “solid” given a challenging retail environment.

“We saw a lot of price deflation as a result of discounting, the unseasonal weather, the impact of the floods, interest rate and petrol price rises and utilities price rise meant that consumers were finding it hard to spend,” he said.

According Brookes, the company saw total sales down 1.4 per cent, if electrical goods were excluded as price deflation impacted negatively on its sales of TVs and electrical entertainment.

On a month-to-month basis, sales improved in February from January but still lags behind on last year’s results, Brookes said.

Meanwhile, Home, and in particular furniture, performed well during the past six months, in part benefiting from increased space as a result of the exit from whitegoods. The performance of its Youth category was also “well during the half”.

In order to maintain its position in the market, Brookes said the company concentrated on its operating gross margin through business improvements including further reductions in shrinkage, further growth in Myer Exclusive Brands and improved sourcing.

“I think the operating cost is a measure of not necessarily what’s coming in our doors but the cost in a number of areas. We’ve been able distribute and our reduce store support office and office staff and things like that. I’d like to think that our cost reduction will also help our customers and we’ve spent the same percentage as we normally would so despite the sales turn down we haven’t compromised anything,” he said.

Bernie highlighted that the company has also recognised the growth of online shopping and will strategise to focus on it with a number of improvements to its website before the end of the calendar year.

“Firstly, the level of online shopping varies between 1 to 3 per cent of total retail sales. Largely, books, videos and travel-related items that can be easily commoditised are being bought online and there is a power purchase so for us in order to combat the online world,” Brookes said.

“A number of things that we will be doing are having exclusive ranges or products that others won’t have. also has thousands of products that give us great opportunity to select and we provided the latest fashion trend and fashion shows, as well as a number of things such as giving customers the option to buy what they see if they like the look.

“And the thing is we’re currently in testing stage and have now gone live with and we’re about the expand it.”

Given the results, Brookes said for the second  half of 2011 it is anticipated that trading conditions will continue to be challenging, predicting that its NPAT for FY2011 to be up to 5 percent below last year’s NPAT of $169 million.