Myer ‘growing market share and winning customers to its loyalty program’

Myer is stripping market share from rivals, sitting on more than $211m in cash and believes it is well prepared for any volatility thrown its way.

Myer chief executive John King.

Myer is stripping market share from rivals, sitting on more than $211m in cash, and believes it is well prepared for any volatility thrown its way by the wider economic settings or trading landscape, as it once again gives shoppers a reason to walk through its doors.

Chief executive John King, who was brought in to rescue Myer in 2018 after it experienced record losses, stinging impairments and falling customer numbers, unveiled his final results on Thursday, as he makes way for executive chairman Olivia Wirth. And although he announced a profit retreat, he says the department store is in a position of strength.

“We are mindful of the macroeconomic situation, customers are still finding it hard out there in terms of discretionary spending, but what’s been important to us is that we have grown our market share, again, and we’ve had a strong start to the second half,” Mr King told The Australian after Myer recorded a 22.4 per cent slide in its interim net profit to $50.5m and a small dip in sales to $1.83bn.

The weaker profit over the 26 weeks to January 27 was within guidance provided to the market in February and was cycling the first-half performance for 2023 that was Myer’s best profit result since 2014, built on record sales.

Myer said first-half comparable sales grew at 0.1 per cent, but the start to the second half was much more rosy, with like-for-like sales better by 4.9 per cent for the first six weeks of the period, as the retailer tightened its inventory and refreshed its seasonal offer.

“This is about new products, and about seasonally right products, and I think we are outperforming the market in terms of current trade,” Mr King said.

“Clearly, we’ve given people a reason to come and shop with Myer, whether it’s our product, or our omni-channel offer, or the fact that is all underpinned by an award-winning loyalty program.”

Shares in Myer rallied 7.6 per cent to 85.5c on the results and the handover to former Qantas loyalty boss Ms Wirth.

Sales for the first half of just over $1.829bn were down 3 per cent, but 13.8 per cent higher than in 2020 before Covid-19 hit to force the closure of its stores, the temporary closure of borders that locked out tourists and the work-from-home trend that robbed its flagship city stores of patrons.

Meanwhile, the introduction of in-store technology and security measures, such as cameras and locked display cabinets in the beauty department, helped keep store theft flat for the half. Myer said group online sales were $390.1m, or 21.3 per cent of total sales, an increase of 2 per cent.

The company declared an interim dividend of 3c a share, down from 4c, payable on May 16. It ended the half with net cash of $211.7m. Mr King highlighted the continued success of the Myer One loyalty program, part of his “customer first” plan, and this would be a key growth pillar for executive chairman Ms Wirth when she takes over in June.

The first-half results revealed that the Myer One scheme took on 374,000 new members, taking active members to 4.3 million and, crucially, these cardholders were shopping more frequently at the department store.

The penetration of sales linked to a Myer One account, known as the “tag rate”, increased to 76.2 per cent in the first half, the highest since the scheme’s inception.

“Our value proposition remains strong, with continued strength in Myer One, which is delivering record engagement, a growing multichannel offer and a strong pipeline of new initiatives,” Mr King said.

He said customer service satisfaction had improved 300 basis points, helped by the rollout of numerous shop-in-shops and new brands across the in-store network, including leading beauty hall exclusives. The upturn in sales growth since the start of the second half was encouraging, especially given the financial constraints on households.

“Like all retailers, we continue to remain cautious about the macroeconomic environment. However, we are encouraged with our results for the first six weeks of the second half, and have a strong program of deliverables to roll out during the half,” he said.

To help quicken its omni-channel platform, increase its online operations and have an improved inventory offer, Myer said the scale-up of its national distribution centre would being this month, with the new Queensland distribution centre starting at the end of the 2024 fiscal year.

Myer also announced on Thursday it had hired advisers to investigate the sale of its fashion brands Sass & Bide, Marcs and David Lawrence. Myer first invested in fashion label Sass & Bide in 2011 and bought the entire business for a total of $72.5m but it has continually underperformed.