Business

Australia's Myer sued by a shareholder after profit fall

2015 Myer Spring-Summer Fashion launch in Sydney on August 7, 2014 Image copyright AFP

Australia's largest department store group, Myer Holdings, is being sued by a shareholder after the firm posted a 23% fall in profit.

The action alleges "loss and damage" because shareholders had been led to believe that profits would be higher.

Myer said in a statement that it "denies the claim and will defend the litigation vigorously". The firm's shares fell by as much as 6% in Sydney.

The litigant, a Melbourne lawyer, is hoping to bring a class action lawsuit.

Last week, Myer's new chief executive, Richard Umbers, warned that underlying net profit was expected to fall to between $75m and $80m this year, which was below analysts' forecasts.

The more than century-old company has has been struggling in recent years to compete with online shopping outlets and foreign brands such as Zara and Topshop.

Mr Umbers, who was appointed earlier this month after his predecessor stepped down, has said the firm had "lost relevance with some customers".

"We acknowledge that in recent years, cost growth has outpaced sales growth, and profits have declined," he said during their last earnings release.

"Digitisation has both empowered the consumer and created new channels to market. Customers have changed the way they shop and their expectations of retailers have changed significantly."

Melbourne-based Myer said it would release the details of a strategy review later this year.

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