Myer Holdings Chief Says Consumer Confidence ‘Worst in 30 Years’

Myer Holdings Ltd. (MYR), Australia’s biggest department-store chain, sees consumer confidence at a three-decade low and doesn’t expect any improvement in at least six months, Chief Executive Officer Bernie Brookes said.

“The poor consumers are being bludgeoned,” Brookes said in an interview at the World Retail Congress in Berlin today. Confidence is “probably the worst we’ve seen it in 30 years” as Australians are forced to pay new taxes on carbon use and funding reconstruction from floods while confronting rising unemployment and higher medical, energy and borrowing costs.

Australia’s fragile political environment is adding to consumer woes, and households may take another 6 to 12 months before resuming spending, Brookes said. “It’s very hard to get definite action and leadership and unfortunately that’s not contributing anything to it at all,” he said.

Sales during the Australian winter slumped as much as 5 percent, the CEO said. Christmas will be a “bit better” this year after being “so bad last year.”

Myer’s online sales may jump to account for 5 percent of revenue “very quickly,” from 0.2 percent now, as the pace of growth has tripled from a year earlier, Brookes said on Sept. 18. As consumers move to making purchases over the Internet, Melbourne-based Myer may operate fewer stores, the CEO said today.

The cost of setting up the online system and fulfillment means so-called starting profits will be held back, but volume growth will be “significant” once the network is set up, and lower rents and wages at the unit will boost earnings, he said.

“Not in the next five to 10 years but I think going forward, the model will change so the answer might be two or three stores less,” the CEO said. Should online operations account for 5 percent to 10 percent of business, the number of stores may be cut by that amount, he said.

To contact the reporter on this story: Sarah Shannon in Berlin via sshannon4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net