Today shares of Myer Holdings Limited [ASX:MYR] experienced a massive dip, dropping by 7.02%.
The multimillion-dollar franchise can’t seem to get a break, as its shares consistently drop on poor sales.
Sales falling is proving to be a disaster for Myer, causing its sixth quarterly decline.
Despite Myer’s attempt to counter the declining sales by discounting stock, shoppers are simply not paying their stores a visit.
How its discounting program failed
Myer selling its expensive merchandise at such a low level has not worked to improve sales at all.
The Sydney Morning Herald reported that Sol Lew, Myers largest Shareholder stated,
‘On today’s evidence that Myer’s extreme discounting program has failed to arrest its sales decline, Myer shareholders should brace themselves for yet another profit downgrade during the fourth quarter.’
Sales margins have been impacted badly thanks to its discounting, investors just don’t see any positive impact of Myer going through with such a strategy.
However, Myer have not tapped out just yet.
Its new appointed CEO, John King will begin in June. Myer hope he will make a difference as he displays a strong portfolio.
Shareholders have been warned to brace for another profit downgrade, which came after Myer reported its fall in the third quarter sales.
Myer are remaining true to their strategy, by placing a vast amount of faith in its new CEO, and what he can bring to the table.
Myer have blamed the further fall in sales due to the heat of summer still lingering around in March and April. Which led to customers deterring away from purchasing its winter line, devaluing Myers clothing line, while rendering its discount strategy to be ineffective.
Myer may profit in later quarters from the product line, but they heavily relied on the sales in the beginning of Autumn to counter its share decline.
For Money Morning
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