This article is from the Australian Property Journal archive
DEPARTMENT store Myer’s sales almost slowed to a crawl over the past six months, as the Reserve Bank of Australia’s rapid rate hikes and inflation saw shoppers slash their spending, and putting further pressure on the major department store’s floor space utilisation.
Myer is expecting FY23 net profit after tax of between $69 million and $73 million – a tidy increase of between 15% and 21% on FY22 – but the second half profit contained within that came in at just $4 million to $8 million.
FY23 full-year total sales are up 12.5% on FY22 to nearly $3.363 billion, and up 12.4% on FY19, however, second-half sales were up by only 0.4% on the same period in FY22, and 11.9% on 2H19.
Group online sales returned to growth of 3.2% in the second half. FY23 group online sales were down 4.5% to $690.5 million, reflecting the favourable impact of store closures in 1H22. It now represents 20.5% of total sales, and compared to FY19, group online sales are up 163.2%.
“Myer’s Customer First Plan has continued to deliver both positive sales growth and positive profit growth in FY23, despite the prevailing macroeconomic headwinds that have buffeted the retail sector throughout the second half,” said outgoing CEO and managing director John King.
“We continue to tightly manage costs, inventory and cash to ensure we have a strong balance sheet as we begin FY24 where we expect the ongoing uncertainty around the macroeconomic environment to persist.”
Australian Bureau of Statistics data for June showed department store turnover fell by 5.0%, the weakest result of all retail categories.
In March, Myer sensationally walked away from its Queen Street Mall Brisbane flagship amid a dispute with landlords Vicinity Centres and ISPT over the terms of a new lease – a move that will trigger the biggest shake-up of the city’s retail landscape in decades – at the same time as it threatened to leave the Myer Centre Adelaide. The landlord, Starhill Global REIT, told the Singapore Stock Exchange Myer alleges there has been a breach of the lease “by maintaining the Myer Centre Adelaide in a condition whereby it is substantially empty of suitably presented retail stores”.
Myer has been undertaking an ongoing floor space rationalisation program, which it has previously stated would total 110,000 sqm in store closures or relinquished excess space.
Myer said yesterday it has a positive expected net cash position of about $120 million, compared to $186 million at the end of FY22. Total group inventory is expected to be flat, which is said mainly reflected “well-controlled intake in response to tightening trading conditions”.
Clearance inventory is at 8.0%, compared to 5.8% a year earlier, of current department store stock on hand.
Myer anticipates releasing its FY23 final results during September.
Following the company’s recent announcement that King would retire from his role in 2024, the board has engaged search firm Egon Zehnder for the CEO replacement process.
This week, department store rival David Jones’ new private equity owner, Anchorage Capital, said up to 100 roles could be cut following a review to streamline floor operations.
