The Coles Myer retailing empire is about to
be broken up, 20 years after it was put together in one of the most
ill-conceived mergers this country has seen.

The company
revealed today that the poorly-performing Megamart discount chain will
be “divested” and that the company’s under-performing Myer department
store’s future is officially under review. All this in the context of a
new five year plan for Coles Myer (how very Russian!)

Details of the rethink came as Coles Myer revealed its sales figures
for the fourth quarter and 2004-2005 in Melbourne today, which showed a
very sharp slowdown, especially at Myer and K-Mart, a slowing in the
growth in the company’s petrol/convenience arm Coles Express, and
slowing sales across the board. Meanwhile, profit was estimated to rise
17% to around $675 million, still far short of what rival Woolworths
will reveal next week.

Comparable store sales growth slowed to
only 1.8% in the final quarter, for a rise of 4.1% for the full year.
The company’s sales slowed dramatically in that final quarter, with
K-Mart declining 2.8%, Myer by 1.9% and Megamart 8.2%.

Food and
liquor same store sales only grew 1.1% in the final quarter and 2.9%
for the year. Woolies same store sales growth in food and liquor rose
3.1% over the year. Overall sales at Coles Myer, including petrol, rose
10.7% in the final quarter and 13.3% for the year, while Woolies
headline sales growth was 13.6%.

Megamart’s nine stores will be
divested. They’re burning money and news has just come in that the
stores will be closed. The company said Myer’s future would be assessed
on the basis of “retention, de-merger and trade sale.”

Coles
Myer was formed 20 years ago this year after the merger of Coles and
the Myer retailing companies. It has struggled from day one, and two
decades later its future looks more uncertain than ever.