New Myer team to embark on transformation

Myer shareholders are bracing for a sharp fall in earnings and big asset write-downs and provisions over the next few years as the new management team embarks on a multi-year transformation plan to reshape the 115-year-old department store chain.

Analysts and investors believe the new team, led by former Woolworths and Australia Post executive Richard Umbers, needs to spend at least AUD150 million (USD117m) over the next three years, on top of underlying spending of AUD30 million a year, to reverse the effects of years of underinvestment in e-commerce, IT, service and stores.

Myer’s earnings could fall by as much as 12 percent in 2016 because the investment will precede any significant rebound in sales, squeezing margins.