Myer to look beyond retail for revenue

Myer executive chairman Garry Hounsell (right) with new CEO John King (left).

John King & Garry Hounsell118-year-old department store Myer is preparing to move beyond its traditional retail business by leveraging its Myer One loyalty program and online infrastructure to offer digital and data services to third parties.

Flagged by executive chairman Garry Hounsell in a letter to shareholders sent on Friday afternoon, Myer will look to hire a new team of talent sourced from traditional, start-up and international companies to work on alternative revenue streams for the struggling business.

Myer’s digital, data, loyalty and financial services businesses could be licensed out for various functions under the plan, Hounsell said.

“To date our focus for these businesses has been to support the core business,” Hounsell said.

“However, there is no doubt that there is significant longer-term potential to leverage these assets to support initiatives outside our core retailing business.”

Myer announced that it was separating the Myer One loyalty program and Myer Online as distinguished business units in March under the stewardship of chief operating officer Mark Cripsey.

Since then the beleaguered retailer says it has achieved better synergy and improved performance in its loyalty and digital business.

Hounsell said on Friday that a more singled minded focus on the business units would enable Myer to drive the assets “harder and faster”.

“These are not traditional retail assets, they are assets relating to technology, media, and publishing as well as insights and analytics,” Hounsell said.

Myer recently launched a fulfilment application called Zippy that helps its team members improve fulfilment times and reduces stock movement costs, a product that Hounsell said could be licensed to other parties.

Hounsell also singled out Myer’s recently launched credit card, its participation in Australia Post’s Shipster delivery club and a Christmas delivery partnership with Uber as key achievements of the newly independent loyalty and digital businesses.

The commentary provides an insight into what incoming chief executive John King, whose appointment was announced earlier this week, will have on his agenda when he takes the reigns at the department store, having been given a full mandate for improvement by the board.

Myer is reeling from three profit downgrades over the last 18 months and a $515 million write down on the value of its brand names and goodwill in March.

Hounsell moved to bolster confidence in his pick for Myer’s captain on Friday amid concern that King will have his work cut out for him in the coming months.

King’s last role as the chief of a department store was at House of Fraser, which he positioned for a sale to Chinese conglomerate Sanpower in late 2014, although the business has fallen on tough times since then.

“During John’s time as CEO, House of Fraser had sales, a store footprint and an operational complexity similar to Myer,” Hounsell said.

“Over the course of his tenure John and his team consistently grew revenues, differentiated the product offering, launched a successful online business, improved EBITDA and reduced the Company’s debt.”

Hounsell also took a thinly veiled swipe at major shareholder Premier Investments and its chairman Solomon Lew, who has been a vocal opponent of Myer’s board for some time and has been seeking to have several of his own nominees elected.

“We strongly believe that your interests as shareholders will be very well served with John King at the helm, supported by a conflict-free Myer board,” Hounsell said.

Premier has yet to comment on King’s appointment.

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