Myer back in black as online sales, store shake-up help bottom line
Myer has stormed back into the black as the fashion house reaps the spoils of a surge in online sales. But that’s not the only thing helping to revive the fortunes of the heavyweight Aussie retailer.
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A surge in online sales, store shake-up and heavy focus on costs have helped department store chain Myer swing back into the black.
Myer has revealed it is again making money a year after the group slumped deep into the red with a net loss approaching $500 million.
The retailer has today reported a full-year net profit of $24.5 million. It came despite a 3.5 per cent dip in revenue, to $2.99 billion, but as online sales surged.
Chief executive John King said the results reflected Myer’s focus on profitable sales and “a disciplined management of costs and cash”.
“We have made progress working with landlords, through a portfolio partnership approach, to reduce our footprint and refurbish stores to transform the customer experience, while simultaneously delivering material cost savings,’’ he said in a statement.
Mr King, who was appointed chief executive in April last year, has set about revitalising Myer by reducing floor space, cutting costs and improving the “customer experience”.
The company is slimming down management ranks as part of its cost-cutting effort.
Myer said like-for-like sales, which strip out the impact of shops that have opened or closed, were down 1.3 per cent in the year to July 27.
That excludes sales of Apple products, which the retailer discontinued in May.
The department store chain continues to struggle to lift like-for-like sales and hasn’t posted growth since the first quarter of the 2017 financial year.
GANGBUSTERS ONLINE
Its performance online, however, has been far better.
Over the past year, revenue from the group’s online business has surged 25.6 per cent to $262.3 million.
Myer said its website was now “our largest store”, making up 9.8 per cent of all sales.
That jump was “particularly pleasing”, Mr King said.
“This growth reflects both the upgraded website that was launched in September 2018 and a significant increase in products available online,” he said.
“We aim to match our store and online ranges by the end of this calendar year and are confident that there are significant opportunities to continue to grow this channel.”
A key pillar to Mr King’s attempts to turn around the struggling Myer, and return it to sustainable revenue and profit growth, is to shrink its floorspace.
Myer said that since July last year, it had either closed or announced the closure of 29,000 square metres in store gross lettable area, and is in talks about reducing a further 5 per cent to 10 per cent of space.
“Significant opportunities remain across our network for space handbacks or closures and these discussions will continue with landlords,’’ Mr King said.
EXCLUSIVE BRAND PUSH
Myer is also introducing more house brands and exclusive labels as part of efforts to differentiate itself from other retailers.
“The rollout of new and ‘Only at Myer’ brands continues with a significant brand refresh currently underway across all stores,” Mr King said.
More than 90 new brands were expected to be added to the range by Christmas, he said.
Over the past year, sales from Myer-exclusive brands grew 1.9 per cent to $527.2 million.
They now account for more than $17 in every $100 of sales.
The retailer also revealed today that it had reduced costs by $32.6 million over the past year.
Less floorspace and “more focused” marketing campaigns were among the measures that helped reduce costs, Mr King said.
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The cost reduction also reflected efforts to simplify operations at the Docklands head office, and savings achieved in areas including IT.
“We believe further opportunities exist to reduce costs, particularly in our supply chain,” Mr King said.
Despite climbing back into the black, Myer said its dividend would remain suspended.
Shares in the group nonetheless surged after the results were released this morning.
In early afternoon trade, they were 12.3 per cent, or 7c, higher at 64c — their highest level since June.
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