Yahoo Finance David Jones and Myer ‘should merge’ say retail experts
Retail giants David Jones and Myer will have to merge or die as online shopping poses an increasing threat, experts have said.
In the last five years, David Jones has cut the value of the company by $437 million. And while Myer posted a narrow fully-year profit of $24.5 million for the 2018-19 financial year, it continues to struggle with declining sales, falling 2.9 per cent over the year.
Speaking to Yahoo Finance, retail expert Amanda Stevens said David Jones and Myer will have to change their business model or join forces if they want to survive what some are calling a “retail recession”.
“I think we're definitely going to see a lot of consolidation. I predicted a few years ago that David Jones and Myer would have to merge at some point, or change their business model. I'm still of that view,” Stevens said.
David Jones’ write-down was also described as “not sustainable”, with Stevens singling the struggling retailer out as needing to “change their strategy dramatically”.
These views are echoed by former Myer boss Bernie Brookes, who told The Australian on Monday that Myer and David Jones will need to merge and cut shop space in order to weather a sustained assault from online retailers.
“There are about 100 department stores in Australia and the viable level is 50 to 60 department stores,” Brookes said.
“Not only should they halve the number of stores but they should also halve the space of the stores. The only logical way the two of them will get returns for their shareholders will be to bring the two businesses together.”
Under Brookes’ vision - which he’s pushed for since 2015 - the two companies would keep their respective brands, but would operate with one head office, buying and operations teams.
He said this would deliver a saving of between $50 million and $80 million.
Brookes’ words come weeks after Myer managing director John King said that he didn’t believe Australia was close to a recession.
"We know it's a challenging time for retail globally... but I wouldn't use the 'R word' in terms of what we think about the economy at the moment," King said.
Amanda Stevens will speak about changing consumer behaviour at Yahoo Finance’s All Markets Summit on the 26th September 2019 in the Shangri-La, Sydney. Check out the full line-up of speakers and agenda for this groundbreaking event here.
