Myer has released its first half results for the 26 weeks to January 26, 2019. Here are the four biggest surprises.
1. Profit is up, but sales are down
Myer reported that net profit after tax was up 3.1% to $41.3 million. While this was better than analysts expectations, total sales were still down 2.8% to $1.67 billion and comparable store sales were down 2.3%.
Myer CEO John King said cost saving measures have been implemented across the business.
“We have put in place a more streamlined and accountable structure in the support office, which is delivering positive results, and we have identified numerous other cost saving opportunities across the business which may be material in future years.”
2. Online is powering ahead
Online and omnichannel sales for the half year were up 18.6% cent to $151.2 million, on the back of a new website launch and an increased free home delivery. This means online sales now account for $9 out of every $100 of sales.
King said eCommerce would be a growing focus for the department store chain, which lost $476.2 million in the prior corresponding period on more than half a billion dollars of writedowns.
“The sales result reflects the continued strong growth in online, the enhanced execution of Christmas, more targeted and relevant marketing and improved service and store layouts,” he said.
The department store intends to outsource a distribution centre for online deliveries.
3. There will be more product shakeups
Myer has moved its focus from unprofitable products such as furniture and bedding to focus on apparel, beauty and private label collections. Sales from Myer exclusive brands rose 3.7% to $292.2 million, with plans to extend its private label range to include footwear and accessories. It confirmed second-half sales will be affected by the exit of some brands and the introduction of others, with Warehouse, Oasis and Jack London among 20 new international brands to join the fold.
4. The store network will shrink
The department store intends to consolidate its network of 61 stores, as King rolls out a plan to operate smaller, more efficient sites with lower rents. He said Myer will reduce its total floor space by 30,000sqm by August, with further reductions announced later this year.
"Reducing space continues to be a massive priority for us," King said. "Supported by a full offer online, that gives us the opportunity to significantly improve the profitability of our space."