SYDNEY Australia's biggest department store, Myer Holdings Ltd (MYR.AX) reported a first-half profit decline that was not as bad as expected, but offered a downbeat outlook for the rest of year that sent its shares sliding.
The mid-to-up-market retailer said it remained cautious about the trading environment for the rest of the year due to "continued pressure on discretionary income and uncertain consumer sentiment".
Hit by higher labor costs and spending on new and refurbished stores, its net profit for the six months ended January 25 fell 8 percent to A$80.7 million ($73.5 million). That was higher than an average forecast of A$74.5 million from four analysts.
Shares in Myer fell, trading 4.1 percent lower at A$2.55 as of 2313 GMT. At one point, they hit a one-month low of A$2.50.
Myer said first-half total sales edged up 0.3 percent to A$1.737 billion, with comparable store sales climbing 1.2 percent, but added that expected store closures and refurbishment would hurt sales in the second half.
It also said online sales would double over the current business year, with the online business reaching "break-even".
Myer has proposed taking over smaller rival David Jones Ltd DJS.AX, with both firms looking to cut costs, take on foreign competitors and catch up with the growing trend in online shopping.
David Jones, which rejected the offer last year, said earlier this week it would assess the value of the proposal, prior to reopening discussions with Myer.
"We welcome David Jones' engagement of a strategic adviser to assess the proposal and the potential synergies it would deliver," Myer said in a statement.
David Jones reported a 4.6 percent fall in first-half net profit on Wednesday, the smallest decline in three years, beating expectations as improved sales overcame lower earnings from financial services.
David Jones shares fell 1.8 percent to A$3.27 as of 2313 GMT. They had jumped around 15 percent since the proposal was made public.
($1 = 1.0987 Australian Dollars)
(Reporting by Maggie Lu Yueyang; Editing by Lincoln Feast and Edwina Gibbs)