Bendigo-born department store chain Myer says it will close more stores and expects another difficult year ahead after its profit tumbled 80 per cent due to writedowns on the value of some of its fashion brands.
Myer on Thursday said comparable sales fell 0.2 per cent for the 12 months to the end of July, while total sales, which includes the impact of three store closures, fell 1.4 per cent.
The company's net profit slumped from $60.6 million in 2016 to $11.9 million - the weakest result since the retailer's sharemarket float in 2009 - marred by writedowns of its investment in the local arm of Topshop, which went into administration in May, and its fashion brand sass & bide.
Sass & bide's performance had been "below expectations", with sales down $10.9 million from 2016, and Myer said it was writing down the carrying value of the brand by $38.8 million. At the same time, Myer's $6.8 million stake in Topshop was obliterated.
"The financial result isn't where we want it to be," chief executive Richard Umbers said after announcing the result.
Excluding the writedowns and costs associated with its turnaround plan, profit was $67.9 million, down from $69.3 million and in the middle of the company's guidance given in July of between $66 million and $70 million.
The result beat consensus forecasts and investors marked Myer's shares up as much as 4.8 per cent in early trade.
Myer said in May it would beat its 2016 result but later revised down its forecast.
"We are obviously disappointed to have not reached our target of exceeding last year's [net profit]... and that progress against our metrics that matter is slower than we anticipated," Mr Umbers said.
"However, Myer has become a leaner, more productive and efficient retailer, better placed to compete in a rapidly changing environment."
Citi retail analyst Bryan Raymond said it was a "reasonable quality" result, in line with the market's relatively low expectations.
"The result was characterised by slower sales growth, but prudent cost management stabilised profitability," he said.
Myer said it would not renew leases at it stores in Colonnades in Adelaide, Belconnen in Canberra, and Hornsby in northern Sydney.