Myer to Close Stores With Weak Sales

Days after menswear store Fletcher Jones announced the closure of several outlets, the weak retail environment claimed another victim. Giant Myer (ASX: MYR) announced on Monday it would shutter in 2012 weak performing chains.

Scheduled for shuttering are the Myer outlet in Tuggeranong in the Australian Capital Territory and Forest Hill in Melbourne. The report also said that Myer is considering closing its chain at Dandenong Plaza in Melbourne and the Wollongong central in New South Wales.

The major retailer is also planning to cut the size of some stores to save on rental and to sign shorter leases on some outlets. At the same time, Myer will strengthen its online presence as consumers prefer to purchase via ecommerce than through traditional bricks-and-mortar stores.

However, while closing some weak branches, Myer is scheduled to open new outlets in Western Australia and Queensland to benefit from the mining boom in these states which brings more shopping money in the pockets of miners' families. As a result, Myer will have up to 80 stores across Australia from the current 68 outlets.

As a result of the announcement, Myer shares declined 2.59 per cent at the end of last week and closed at $2.26.

Myers, however, was optimistic that it would enjoy the yearend Christmas sales as it expects higher sales due to the lower interest rates passed on by Australian banks to consumers.

Among the bestsellers for the Yuletide sales are Barbie and Lego toys for children, cook books, perfumes and high tech gadgets such as digital cameras, iPods and tablet computers for adults.

Australian Retailers Association Executive Director Russell Zimmerman blamed the cold start to summer for the weaker sales of clothes and shoes.

"Retailers out there are seeing some blue sky, a bit more tinsel on the Christmas tree.... But clothing retailers are still doing it fairly tough out there," Mr Zimmerman told News.com.au.

"The weather has been too cold for them - they need that really good run of hot weather and they haven't seen it." He explained.