May 16, 2018 / 12:00 AM / 6 months ago

UPDATE 3-Australian retailer Myer slows sales decline as new CEO begins

* Myer says Q3 sales fall 2.7 pct vs 3.6 pct in first half

* New CEO to start on June 4

* Shares climb 14 pct, still less than half their value a year ago (Adds shareholder quote in last two paragraphs)

By Byron Kaye

SYDNEY, May 16 (Reuters) - Australia’s biggest department store chain Myer Holdings Ltd said on Wednesday third-quarter sales fell less than analysts had feared and gave a start date for its new CEO, causing a bounce in its shares after months of heavy selling.

Though it continues a pattern of decline that has affected department stores globally, the update offered a reprieve from a run of profit warnings, impairment charges and executive departures that has hammered the 118-year-old company’s shares.

Myer hopes a strategy of discounting, store closures and ramped-up online sales will see it take on the likes of Amazon.com Inc and fast fashion retailers such as Zara, owned by Industria de Diseno Textil SA, which have made big inroads in the world No. 12 economy.

The Sydney-based retailer said sales fell 2.7 percent in the quarter to the end of April, better than its 3.6 percent decline in the first half which analysts had expected to continue. Online sales, which account for about one twentieth of total sales, surged 49 percent.

Myer added that British retail veteran John King, who it hired after sacking its previous leader in February following a series of profit warnings, would start on June 4.

“John has been given a full mandate by the board to deliver an improvement in the company’s financial performance,” Executive Chairman Garry Hounsell said in a statement.

Myer shares jumped, trading 14 percent higher at 42.8 Australian cents in afternoon trade, although they were still less than half their value a year ago and a tenth of their 2009 issue price. The broader market was up about 0.5 percent.

“The market’s reacting strongly (but) the share price is still a long way from where it was six months ago,” said Johannes Faul, an analyst at Morningstar.

Shareholders are concerned the company will breach a debt facility if its sales fall much further, and want a clearer explanation of its strategy, Faul added.

In March, soon after ousting its CEO, Myer posted its biggest half-yearly loss since listing as it wrote off underperforming assets.

On Wednesday, the company blamed an unseasonably warm start to the Australian winter for continued the sales decline. The company also blamed warm winters for missing sales forecasts in 2016 and 2014.

The update prompted a rebuke from Myer’s biggest shareholder, retail veteran Solomon Lew who holds 10.7 percent, who said its discounting had “failed to arrest its sales decline” and would likely result in another profit warning.

“Myer has been selling dollar notes for 50 cents and it’s still not working to improve sales, but shareholders will yet again be left to pick up the tab when Myer announces its disastrous full year loss,” said Lew who has led a revolt against its board.

Myer declined to comment on Lew’s statement.

($1 = 1.3387 Australian dollars)

Reporting by Byron Kaye in SYDNEY and Aaron Saldanha and Aditya Soni in BENGALURU; Editing by Stephen Coates and Edwina Gibbs

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