Myer Shows ‘Solid HY20 Results’ Despite Macro Headwinds

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By Published On: March 5, 20200 Comments

Myer (MYR: ASX) has released its HY20 results, with a mixed bag of positive and negative outcomes of the last half-year.

Total sales are down 3.8 percent to $1.607 million. Comparable store sales are up 0.4 percent, excluding Apple and Country Road Group sales.

Myer’s online platform has received an impressive result, with sales up 25.2 percent to $168.2 million. Online now represents 10.5 percent of all sales.

Myer’s EBITDA is down 0.4 percent to $113.1 million, but the net profit (after tax) is up 0.4 percent to $41.5 million.

“This result demonstrates our continued focus on profitable sales, a disciplined management of costs and cash and strengthening the balance sheet,” said John King, CEO and MD of Myer.

“Achieving growth in EBIT despite a deterioration in the operating environment during our peak trading period validates the Customer First Plan and illustrates the progress made to date.”

According to King, there are numerous reasons why the total sales number dropped, including the exit of Apple and Country Road Group.

“Sales were impacted by a number of factors including the continued focus on profitability, the exit of Apple and the Country Road Group brands, and a disappointing performance in Womenswear,” King explained.

“Management acknowledge the underperformance in the Womenswear category and expect improvements made by the new leadership team to flow through later in the calendar year.”

With the growth of online sales, Myer is expected to amplify its push for e-commerce. This growth partially offset the store decline, which was mainly due to a fall in foot traffic.

“Pleasingly, there was continued strong growth in online sales, despite the exit of several low margin brands,” King continued. “During the period the online range was expanded, in particular in concessions, and checkout and Click & Collect were improved which combined to underpin the continued growth.”

Online sales now account for 10.5 percent of total sales, with gross profit growing faster than sales. Myer has experienced a five percent lift in its customer experience satisfaction score. In the next phase of growth, Myer plans to integrate and scale its marketplace and improve its delivery experience.

The Coronavirus (COVID-19) may impact Myer’s supply chain in the next few months, as King suggested. “The supply chain impact of Coronavirus is currently being managed by our teams in Hong Kong and Shanghai,” King explained. “The team are focused on mitigating the impact of delays to the planned delivery of merchandise.”

“Myer anticipates the challenging macro environment will continue in the second half, and the ongoing impact of the Coronavirus on store traffic remains uncertain. The pace of change will, therefore, be managed in the best interests of customers and shareholders.”

Despite these headwinds, Myer is aiming to up its Customer First Plan, as well as focussing on its Womenswear department, which has been ‘underperforming’ in the last few months.

“Management have demonstrated discipline in a tough trading environment, and while I am encouraged by the progress I am in no doubt that we still have considerable work to do,” King said.

“We have a clear plan to address the underperformance in Womenswear with new management and a strengthened design team for Myer Exclusive Brands, with improvements not anticipated until FY21.”

The Customer First Plan that Myer is implementing includes various steps. The values include ‘Customer Comes First’, ‘Own our Future’. ‘Do What’s Right’ and ‘One Inclusive Team’. The focus areas of this initiative include ‘enhancing’ the Myer e-commerce site and pushing ‘Only at Myer’ brands and categories.

Since August 2019, Myer has introduced 135 new brands to its inventory, including Forever New, Lorna Jane, Reebok and DKNY.

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About the Author: Power Retail

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