Online sales push Myer back into the black
Written on the 5 September 2019 by David Simmons
Department store Myer's (ASX: MYR) attempts to play catch-up with the now firmly established world of e-commerce appear to have finally paid off in FY19.
The group's online sales increased by 25.6 per cent to $262.3 million in the financial year, following the relaunch of the Myer.com.au online shopfront in September 2018.
This rise of approximately $53 million in online sales has edged the group's financial results into positive territory.
Online sales include Myer.com.au sales plus Marcs, David Laurence, and sass & bide online sales.
The long-awaited embrace of the online and digital world was a large part of the group's 'Customer First' turnaround program.
Digital sales - defined as online sales plus sales via in-store iPads - are now the group's largest store, representing 9.8 per cent of total sales.
The company's statutory NPAT for FY19 was $24.5 million; a stark difference from the group's monolithic $486 million loss in FY18 that was primarily the result of a $500 million impairment charge on the goodwill of Myer.
However overall total sales were actually down 3.5 per cent during FY19 to $3 billion. The company says the softened sales are the result of the retailer focusing purely on "profitable sales".
During FY19 the company reduced the cost of doing business by $32.6 million, reflecting improved efficiencies in stores as well as cost savings achieved in IT, occupancy and marketing. Myer's EBITDA was up 7.2 per cent to $1 billion.
Improving customer experience was a primary focus for the group during the year, resulting in refurbishments at Maroochydore and Castle Hill being completed.
In May the company reversed a decision to close the Belconnen store, with Scentre Group dedicating itself to investing in the store to provide an enhanced shopping experience.
The company has also focused on expanding its best performing brands like Polo Ralph Lauren, Rodd & Gunn, Tommy Hilfiger, Calvin Klein, and Forever New to additional stores.
In the past year Myer has added more than 50 new brands including Karl Lagerfeld Paris, Fiorucci, Jack London, and more.
Myer CEO John King says the results of the implementation of the Customer First program are promising but there is still plenty of work left to do to turn Myer around.
"In the first year of the Customer First Plan, we have progressed a number of strategic initiatives, but recognise there is much more to be done to transform this business in the interests of customers and shareholders," says King.
"We anticipate the challenging macro environment and subdued consumer sentiment during FY2020. However, we have identified a number of opportunities to improve productivity and to continue to reduce costs, through both cost savings and efficiencies, across our supply chain as well as other non-consumer facing activities."
Shares in Myer are up 10.53 per cent to $0.63 per share at 11.13am AEST.
Business News Australia
Author: David Simmons