Australian department Store Myer Holdings Ltd announced total sales for the 26 weeks to 29 January 2011 were $1.73 billion, down 3.5 percent compared to last year. On a like-for-like basis, excluding the impact of new stores, refurbishments and Myer Melbourne, sales were down 5.2 percent.

Chief Executive Officer Bernie Brookes said “This is a solid result, in the context of a very challenging and patchy retail environment.

“As we announced on 7 February 2011, trading in the past six months has been characterised by ongoing fragile consumer confidence and a highly competitive market with widespread discounting.

“We, like other discretionary retailers, observed a consumer who is not only more cautious to spend and has an increasing tendency to save but is concerned about a variety of cost imposts on household disposable expenditure such as additional taxes, utilities, health care, and petrol costs, as well as interest rates.

“While our sales and EBIT results reflect this trend, we were able to improve our operating gross margin through a number of business improvements including further reductions in shrinkage, further growth in Myer Exclusive Brands and improved sourcing.”

First half sales were impacted by a number of factors. Consumer confidence remained fragile as a result of widespread increases in the cost-of-living, including higher interest rates, with sales declining sharply following the surprise interest rate hike in November 2010. Additionally, in the past six months consumers have demonstrated an increased propensity to save.

Following an unseasonal cool and wet start to summer, a number of stores in Queensland and Victoria suffered further from the impact of extensive floods in December and January, as well as impacts from Cyclone Yasi. The estimated total sales impact from the floods and cyclone was around $11 million with approximately $5 million impacting 1H2011.

Stores located in popular Queensland tourism areas such as Cairns, Maroochydore and Pacific Fair were impacted by a reduction in overseas tourism. Sales across many categories were impacted by price deflation as a result of increased discounting.

Foot traffic was down on last year, particularly in stores located in the eastern states. Conversion, however, remained in line with last year’s level and encouragingly the average transaction size and units per transaction were above last year.

Mr Brookes said “Despite the ongoing challenging retail environment our strategy remains unchanged.

“Sales have improved since January but are still behind last year. In the second half of 2011 we anticipate trading conditions will continue to be challenging and we continue to expect NPAT for FY2011 to be up to 5 percent below last year’s NPAT of $169 million.

“Myer is very well placed to benefit from any increase in consumer confidence and discretionary spend when retail trading conditions improve,” said Mr Brookes.