The response from investors demonstrated that this was far worse than they had expected. Myer shares slumped more than 18 per cent while Premier, which has been the sharemarket darling of the retail space for years, saw its stock plunge more than 15 per cent.
These equally diabolical trading updates from two major retail groups, Myer and Premier, come as the pair are slated to merge this year, so the joint earnings pain is therefore unlikely to jeopardise the deal. The shareholder meetings to approve the deal will take place in a couple of weeks.
Myer executive chair Olivia Wirth said the retail environment was challenging, driven by a tough macroeconomic environment. She said trading during the Black Friday event was strong but that consumers remained cautious and focused on value.
In other words, few consumers are prepared to pay full retail price in the current environment. They will spend only on sale items and the discounts need to be meaningful.
Westpacโs latest intelligence on shopping โ which is derived from tracking credit and debit card activity โ showed spending in the week up to Christmas experienced a steep drop followed by stronger activity during Boxing Day and new year sales.
The consumer shopping hesitancy that has eaten into Myer and Premier brands will be hitting others in discretionary retail land and it is likely to lead to analysts shaving their profit expectations for others in the sector.
Loading
And this is a situation that shows no signs of improving until some consumer confidence returns, which is likely to come about when interest rates begin to fall.
But while some economists revisited their expectations last week on interest rates and have brought forward the timing of the first cut, the broad consensus remains that we wonโt see any movement from the Reserve Bank of Australia at its next meeting in February.
The next opportunity after February arrives on April 1. Consumers have been waiting a long time for falling inflation to feed into lower interest rates.
It looks like they want to see the evidence rather than the expectation before they return to the shops.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
About The Author
