This article is from the Australian Property Journal archive
JOBKEEPER, rent relief and online sales growth helped Myer post a first-half profit, despite quiet CBDs across the country slashing foot traffic at many of its key department stores.
Total sales for the period – which runs from August to January – were down 13.1% to $1.398 billion. Comparable store sales were down 3.1%, a figure that flips to 6.1% growth excluding its six CBD stores. The CBD stores saw comparable store sales plummet by 32%.
“Sales during the period were impacted by several macro headwinds including widespread government mandated store closures and travel restrictions which, combined with customer concerns relating to COVID-19, led to reduced foot traffic in many stores,” chief executive officer John King said.
Myer’s Melbourne CBD stores were particularly affected during the period by Victoria’s second lockdown. According to the Property Council of Australia, office occupancy in Melbourne was at just 24% in February, while Sydney had the second lowest rate in the country at 48%.
Some $51 million of JobKeeper payments and $18 million in rent and outgoings waivers wiped $86.0 million, or 20.9%, from Myer’s cost of business during the first half, down to $325.2 million.
Online sales lifted 71% to $287.6 million and have doubled in their representation of Myer’s total sales over the past year to 21%.
As well as added investment in online, King is planning on slashing floor space by 110,000 sqm through store closures or relinquishing excess space as part of his bid to cut costs. He said yesterday that the space reduction target remained on track, and that it had agreed to space handbacks during the period at Highpoint and Morley.
Leases across more than 190,000 sqm worth of floor space expire within three years.
Prior to the pandemic, Myer flagged further space handbacks and store closures as its struggled in the difficult retail environment. Last month, AMP Capital announced that Myer had ceded space and 30 retailers have been moved or close down to make way for the first automall within an Australian shopping centre.
Dividends remain suspended. Statutory net profit after tax was up 76.3% to $43 million. EBITDA declines by 1.7% to $214.6 million and EBIT lifted 2.7% to $109 million. Operating gross profit margin declined by 55 basis points to 38.6%, due in part to lower margin sales in apparel categories early in the period.
Myer is continuing its international hunt for a new chairman, after pressure from its major shareholders Solomon Lew and Geoff Wilson forced Gary Hounsell to step aside just hours ahead of its annual general meeting in October, a month after agreeing to reduce the number of directors on its board and cut fees.
Myer’s result lands one week after the parent company of rival David Jones, Woolworths Holdings, revealed the department store had received a combined $39 million in JobKeeper payments and rent relief during the half.
Woolworths Holdings had planned to slash 20% of its floor space through store closures and optimisations by 2026, but CEO Roy Bagattini said in September this would be fast-tracked to a period of just two years. David Jones is yielding an entire floor in Melbourne’s super-regional Highpoint Shopping Centre to make way for a new Kmart, while last year it sold the six storey building at 299 Bourke Street in Melbourne for $121 million, and will move the menswear offering from the building to the larger flagship store opposite, at 310 Bourke Street, which itself will be refurbished.
It has undertaken similar moves in Sydney, and offloaded its Elizabeth Street flagship store for $510 million over summer as it seeks to free up capital.
