This article is from the Australian Property Journal archive
DEPARTMENT store Myer has roared to its best-ever first-half sales tally as shoppers returned to the CBDs and its omni-channel strategy proved effective, but it remains cautious about the impacts of the economic environment.
The major department store posted total sales growth of 24.2% to more than $1.88 billion, a figure that is also 17.2% higher than the pre-COVID 1H20 period.
CBD stores were the strongest channel, increasing 5.7%, or 20.0% on a comparable basis when lockdown periods are excluded. Group online sales were $382.3 million or 20.3% of total sales, falling 9.8% due to mandated lockdowns in the prior period, but represents a three-year compound annual growth rate of 31.5% from 1H20.
Net profit after tax more than doubled to $65.0 million, its highest in nine years.
“Our strong omni-channel offer continues to give us the ability to capture the opportunities that pure plays simply cannot, with strong growth in our store sales reflecting the rebalancing of sales post lockdowns, a return to CBD growth and a robust online business providing synergies in both digital and physical environments,” said Myer CEO John King.
King has plans to slash up to 110,000 sqm of floor space through store closures or relinquishing excess space in a bid to cut costs.
Myer rewarded shareholders with a fully franked interim dividend of 4.0c per share, plus an additional fully franked special dividend of 4.0c per share. The result comes a week after major shareholder Solomon Lew – who has been a vocal and consistent critic of Myer’s board and direction, making a play at the board little more than 18 months ago – upped his stake further to nearly 26%. He will reportedly pocket almost $16.9 million in dividends.
Myer’s share price closed 17.5c higher at $1.13.
King said department store sales growth in the eight weeks post-Christmas was up 16.1% over the prior corresponding period – which was hit by the Omicron wave – and which he said showed Myer was delivering sales momentum despite tightening economic conditions.
However, the rising cost of living and impact of growing interest rates are likely to hit Myer and its rival David Jones.
“Like all retailers we remain cautious about the macro-economic environment, however, we are pleased with the momentum we are generating through the Customer First Plan and have a strong pipeline of initiatives still to come, which will ensure we are well placed for the future,” King said.
Myer said its Myer loyalty and partnership eco-system “delivers a leading retail customer loyalty proposition if trading conditions tighten”. Active Myer One members increased to 4.1 million.
Myer will be hoping customers continue to respond to investments in making key brand partnerships bigger, while it reintroduces Country Road Group and Bendon, and introduces new brands such as American Eagle.
Myer said inventory levels have been held consistent year-on-year with more newness, despite the substantial sales increase and supply chain disruptions.
Operating gross profit lifted 17.4% to $683.2 million. Margin decreased by 212 basis points to 36.3% ,which includes the unfavourable impact of higher shrinkage and foreign exchange movements.
Cost of doing business was $442.5 million or 23.5% of total sales, representing an improvement of 126 basis points.
Net cash at period’s end was up $50 million to $267 million.
