Myer Q1 sales slip 2.8 pct Cuts three-year sales growth target...

• Myer Q1 sales slip 2.8 pct
• Cuts three-year sales growth target to 10 pct from 20 pct
• Shares hit 5-wk low

(Recasts with targets, adds stockbroker comment and updates shares)

Australia's biggest department store chain, Myer Holdings Ltd (MYR), cut its growth targets on Wednesday and said sales had slipped in the first quarter in the face of stiff competition, sending its shares sharply lower.

Once a dominant force in retailing, Myer's business model has buckled under pressure from new foreign rivals at a time of lacklustre consumer spending and flat wage growth. It posted its worst profit as a listed firm in September.

The company on Wednesday again blamed "challenging retail conditions" and competition for the drop in sales, as its "New Myer" turnaround strategy hit headwinds. It halved its three-year target for growth in sales per square metre from more than 20 percent to 10 percent.

Total sales for the 13 weeks to Oct. 28 fell 2.8 percent to A$699 million ($535.1 million). On a comparable store basis, sales fell 2.1 percent.

That pushed Myer shares, which are already stuck near all-time lows, as much as 5.2 percent lower to a five-week trough of A$0.73 on Wednesday, its biggest intraday fall in more than three months, while the broader market (xjo) rose 0.5 percent.

"The strategy has to be to regain the trust of buyers and it seems that Myer isn't really going to realise that ... it's not getting the rise in volumes you'd expect from cutting price," said Ric Spooner, Chief Market Strategist at brokerage CMC Markets.

While the company gave no profit figures, the weak first-quarter sales figures heap pressure on the board as it faces a rebellion from top shareholder Solomon Lew.

The billionaire veteran of Australian retail and chairman of Premier Investments Ltd (PMV) has turned on Myer's leadership since it rejected his demands for board seats.

Myer hit back in a letter to shareholders this week, saying it would be "enormously damaging" to allow a competitor like Lew to have seats on the board.

($1 = 1.3063 Australian dollars)