Australia's Myer Holdings says H1 net profit slips

Myer Holdings Ltd, Australia's biggest department store operator by sales, said on Thursday that first half net profit fell 4 percent as it scrambled to cut overhead and cope with fierce competition online.

Net profit for the operator of more than 60 high street stores was A$59.7 million for the six months to Jan. 23, down from A$62.2 million the previous year. Total sales grew 1.8 percent, with the company reporting a "solid" performance over the Christmas period.

The Melbourne-based retailer nudged up its full-year profit guidance to a range of A$66 million and A$72 million, from a range of A$64 million to A$72 million.

Under new Chief Executive Officer Richard Umbers, Myer is spending A$600 million over five years to shut underperforming stores, revamp others and improve online offerings to survive what has become a perfect storm for its 116-year-old business model: fierce competition from online and from global "fast fashion" chains like H&M Hennes & Mauritz AB.

"Only months into the first year of our five year strategy, we are pleased with the early progress and positive customer response," Umbers said in a statement.

Myer's nearest domestic rival, David Jones, has been benefiting from its own makeover from its new owner, South Africa's Woolworths Holdings Ltd, which in 2014 outbid Myer for it. In January, Woolworths said David Jones grew its first half sales by 11.2 percent.

For Australian investors, Myer has become synonymous with overpriced private equity IPO exits. Net profits have declined every year but one since TPG Capital Management LP re-listed it in 2009 after three years, shorter than the customary private equity turnaround of four years.

The retailer's share price has followed profits south, never trading over their A$4.10 issue price and closing on Wednesday at A$1.10.

In 2015, retail investors purchased only A$4 million worth of shares in an A$221 million rights issue aimed at funding Umbers's Myer overhaul. Underwriters and institutional investors had to purchase the rest.

Myer declared an interim dividend of 2 Australian cents for the latest six-month period, up from no interim dividend the previous year year.