Myer boss mauls Victoria retail shutdown, as it posts $172m full-year loss

A ‘frustrated’ Myer CEO has pleaded for relief from Victoria’s lockdowns as the chain posted the second biggest loss in its history.

Myer was forced to close its stores at the height of the pandemic. Picture: AAP

Myer chief executive John King believes the nation’s largest department store can be profitable as shoppers become accustomed to a “COVID-19 normal” world, with the retailer building its online platform and targeting a doubling of online sales to $1bn as costs remain in check.

The retailer’s stable of regional and suburban stores, once viewed as laggards, are now at the frontline of catering to shoppers not going into flagship CBD stores, while Mr King reminded the market Myer’s online business was bigger than much-hyped online pure-play retailers such as Temple & Webster.

Common sense is missing, says Myer CEO John King.

But investors were nervous, and sent Myer shares down 17 per cent to 21c as losses worsened for the former darling of Australia’s retail scene.

Mr King told The Australian that Myer was profitable heading into the COVID-19 pandemic, but forced store closures, the evaporation of city shoppers and tourists, combined with impairment ­charges sparked by the health crisis had sunk it into losses for the full year.

“We were profitable before, we went in with the first half of profit over $30m and last year we were profitable and the last 18 months pre-COVID were the first three halves of profitable growth,’’ Mr King said as Myer sunk to a full-year loss of $172.5m for the 2020 fiscal year, the second-biggest loss in the company’s history.

“We have strong stores in the regions outside of the big CBDs, and we are seeing strong growth in a lot of those stores where people are staying local.

“The other thing is our online business is on fire. It has done over $400m this year and it is growing at an incredible rate.

“We rebased the cost of running this business to the new world, so we are assuming the worst and we will set our costs on the basis of that, and then if there is an uptick it will just fall straight through to the bottom line.’’

His comments came as Mr King despaired at the cost to businesses from the severe stage-four lockdowns in Melbourne that he warned could devastate the sector, ruin business plans and wreck the crucial Christmas trading season when retailers make most of their profits for the year.

“COVID is here to stay, what we have to do is adapt our world to it,” he said. “And trust people to be sensible. We need a commonsense supercomputer … what we are missing is common sense.

“The best case is we are frustrated and disappointed, the worse case is devastation for small business and I am concerned. We need to be open in October.”

A worsening loss for the department store, its second in three years, was driven by the poor trading conditions inflicted by the health crisis, as well as $159m in restructuring charges and other one-off items.

Significant items included impairments to Myer brand names of $95.9m and lease liabilities of $37.1m. The loss for 2020 was against a small profit of $24.5m in 2019 and came as revenue for the year slid by 15.8 per cent to $2.519m. It stands as one of its biggest losses in the retailer’s 120 years of operations. In 2018, Myer posted a full-year loss of $486m as writedowns and impairments drenched its accounts in red ink.

No full-year dividend was ­declared.

Myer said early impacts on the company were delays in supply chains and sourcing private label product, primarily from China, as the COVID-19 pandemic emerged and rattled companies dependent on Chinese supply chains.

As the pandemic progressed, the impact on the company’s business began to increase, as gov­ernments announced the implementation of isolation and distancing measures, and restrictions.

In late March, Myer was forced to temporarily close all 60 of its stores to protect the health of its customers, team members, their families and the broader communities in which it operates.

A woman wearing a face mask walks past the Myer Bourke Street store in Melbourne. Picture: Getty Images

As consumers were locked at home and restrictions on the movements of shoppers were tightened, shoppers turned to online, with Myer reporting 2020 online sales rocketed 61.1 per cent to $422.5m.

Myer’s online sales in the ­second half jumped almost 100 per cent.

Store closures in the second half meant like-for-like store sales for 2020 were down 3.3 per cent.

Myer was successful in its application for the government’s JobKeeper scheme, which ensured a significant number of staff could be maintained.

Of the $93m received by Myer, $41m was paid to staff whose remuneration was lower than the required income threshold.

Several other payment deferrals, as well as rent relief, were also negotiated.