By Claire Reilly
Myer has announced that it will cut 100 of its 13,000-strong workforce due to increasing costs in the retail sector. In a statement made today, the company’s CEO Bernie Brookes said the decision was "prudent and necessary" and would ensure Myer could remain "attuned" to its operating environment.
“We have determined a support structure that will take the business forward and underpin our investment in our core offer, including continuing the investment to improve customer service, enhancing our merchandise offer, our loyalty program, delivering our omni-channel offer and optimising our store network,” he said.
"We regret the impact on those team members affected and have provided assistance to them in terms of severance payments and support for job transition.
“It is well known that the retail sector is experiencing the toughest conditions seen in over 25 years.
"Costs to retail businesses are increasing significantly due to higher occupancy costs, higher wage costs, and the inflation of other outgoings including utility charges. Given these factors, it is prudent to review how we support the business to maximise the flexibility of operations for the future.”
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Like many other retailers across Australia, Myer has faced falling profits and reduced sales in recent times, with the company announcing a drop in profits of almost 20 per cent when it released its half-yearly results in March of this year.
At the time, Brookes announced that the retailer’s electrical division was continuing to struggle, largely due to the well-documented collapse in the flat panel sector.
“The Electrical category continued to be impacted [in 1H FY2012] by planned category exits and rationalisation (white goods, consoles and gaming, music, DVDs and navigation systems) impacting sales by $22 million in the first half,” Brookes said in March. “We are replacing this space with higher margin categories.
“Appliances and Home Office continue to perform well,” added Brookes. “The current market conditions relating to TVs, music and DVDs reflect a saturated and competitive market with significant price deflation.”
This announcement followed a string of bad news over recent years for Myer’s electrical and appliances divisions, with the retailer confirming in September 2010 that it would completely exit the whitegoods category, before announcing one year later that it had “reengineered” its electrical offering and was “rationalising” its music and DVD offering.