Cost-cutting, focus on profitable sales drive ‘modest improvement’: Myer

Myer CEO John King.
Myer CEO John King.

Myer saw a “modest improvement” in its first full year under CEO and managing director John King’s turnaround plan, despite challenging trading conditions in the second half which tempered some of the department store’s first-half gains.

Most of the improvement came from reduced costs, primarily rent and wages, rather than an increase in sales, with roughly $33 million cut out of the business over the year ended June 30, 2019.

Total sales fell 3.5 per cent year on year to $2.99 billion in FY19, and comparable store sales were down 2.9 per cent.

Excluding sales in Apple products, which Myer exited in May, comparable store sales were down 1.3 per cent. Both total sales and comparable store sales fell at roughly the same rate as they did in FY18.

An increased focus on profitable sales, including a shift in the sales mix away from concessions and towards Myer ‘exclusive brands’, contributed to an improvement in operating gross profit margin 38.85 per cent, up 65 basis points year on year. Operating gross profit was $1.2 billion, down 1.9 per cent year on year.

Excluding implementation costs and individually significant items related to redundancies and lease provisions, Myer posted a 7.2 per cent improvement in earnings before interest, tax, depreciation and amortisation.

Net profit after tax was up 2.2 per cent year on year to $33.2 million.

King made it clear during an earnings call with analysts and investors that the department store is sticking to the customer-first plan he laid out last September.

“We will continue to focus on the customer, we’ll continue to deliver against this plan in the best interest of our customers and shareholders,” King said on the call on Thursday.

“The plan we started is a plan we’re delivering against today, and will be the plan we’ll be delivering against in the coming months.”

King also announced the appointment of Tony Carr as the company’s new executive general manager of supply chain. Carr was previously head of logistics at ASOS.

More to come.

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