This article is from the Australian Property Journal archive
DEPARTMENT store Myer has identified further “significant” opportunities to hand back more floorspace and close additional stores, and will invest more on the growing online business, which is now its largest store, accounting for 9.8% of total sales.
Myer was back in the black booking a statutory profit of $24.5 million, compared to $486.0 million loss in FY18.
Despite sales falling 3.5% to $2,991.8 million, Myer recorded a full year net profit of $33.2 million, an increase of 2.2% from $33.2 million. EBITDA rose 7.2% to $160.1 million.
Comparable store sales down 1.3% excluding sales in Apple products (exited May 2019). However online sales were up 25.6% to $262.3 million. Digital sales up 21.9% to $292.1 million, and is now Myer’s largest store, representing 9.8% of total sales.
CEO John King said in the first year of the customer first plan, Myer has progressed a number of strategic initiatives, but recognise there is much more to be done.
“We have made progress working with landlords, through a portfolio partnership approach, to reduce our footprint and refurbish stores to transform the customer experience, whilst simultaneously delivering material cost savings.
“We announced with Scentre Group a plan to refurbish our store at Belconnen to create an enhanced shopping experience across a reduced floor space. Similarly, we will hand back a floor and refurbish our Cairns store from January 2020.
“We have also agreed to exit level four of Emporium in Melbourne from May 2020,” he added.
Vicinity Centres and Singapore’s GIC, the owners of Emporium, have plans to reconfigure the 6,600 sqm Myer vacates and make way for a co-working hub.
“During the year we reduced costs by $32.6 million reflecting the enhanced new staffing model in-store, more focused marketing spend, reduced store occupancy, as well as efficiencies and reduced waste across all areas of our business.
“In addition to cost savings expected with further space reductions, material opportunities remain to reduce costs in supply chain and fulfilment, as well as other non-customer facing activities,”
King said significant opportunities remain across the network for space hand backs or closures and these discussions will continue with landlords.
“Since July 2018, we have either closed or announced the closure of 29,000 sqm in store Gross Lettable Area (22,000 sqm SLA), with a further 5-10% of our store GLA under active discussion,” he continued.
Myer is not the only retailer handing back space, David Jones announced a fortnight ago it was reducing its footprint by 20%.
Meanwhile Myer has also identified savings from its longer term warehousing and supply chain requirements. King said a review will be finalised during 2020 under the leadership of new executive general manager of supply chain, Tony Carr, who has worked for the likes of online retail giant ASOS.
“We are confident that significant savings exist in our supply chain as well as efficiencies with a planned centralised distribution model in future years,” he said.
Looking ahead, King said the challenging macro environment and subdued consumer sentiment will continue during FY20.
“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 noncustomer facing activities.” King concluded.
