Despite Sass & Bide, Marcs and David Lawrence representing half of Myer’s 26 per cent net profit fall in FY24, the department store is doubling down on retaining ownership of the three specialty brands and pushing forward with its merging consideration of Premier’s key apparel brands under the Just Group.
Speaking at an investor presentation this morning, Myer executive chair Olivia Wirth confirmed the strategic review into the merger with Premier is well underway, now in the due diligence phase.
Under the proposed deal, Myer will acquire Premier’s five apparel brands - Just Jeans, Portmans, Dotti, Jay Jays and Jacqui E - for shares proportionate to both businesses' operating profit.
In the same swoop, the department store scrapped its original plan to sell off Sass & Bide, Marcs and David Lawrence. This is despite these three brands underperforming in FY24, adding to a full-year sales slip for Myer of 2.9 per cent to $3.26 billion and an NPAT fall of $18.5 million to $52.6 million.
Myer has also commenced a reset of the Sass & Bide business in particular, including the closure of 10 retail stores in the first half of FY25, with four stand-alone stores remaining. The reset also includes the restructuring of Sass & Bide’s support operations and new Myer concession pads to open from the first quarter of FY25.
Wirth was asked later in the presentation whether it is worth doubling down on the Premier merger, adding another 600 stores to its specialty brand portfolio, rather than pushing for a concession deal with the five apparel brands.
The executive chair dismissed the premise of the question, which also questioned whether Myer is the right owner for the three specialty brands.
“Firstly, as I mentioned before, FY24 was a tough year for Sass & Bide, Marcs and David Lawrence,” Wirth said. “But prior to that, these businesses had been contributing.
“The reason why we believe that there is a pathway through here for Sass & Bide, Marcs and David Lawrence, is because of a combination of things.
“We understand our customer, we know what they want, and we have the access to drive consumer behavior through our loyalty program. We've got the fleet of the 56 Myer stores, plus we have a strong e-commerce capability.
“So with the combination of these assets, we believe that we can drive these businesses in a different way.”
Wirth also noted that the three specialty brands have previously been run at arms length, adding that Myer will bring them closer.
Regarding the Premier merger proposal, Wirth said the preliminary phase of the ongoing strategic review identified growth for Myer’s private label and exclusive brand portfolio. Myer's exclusive brands make up 17 per cent of its overall product mix, with national brands leading at 57 per cent, and concessions at 26 per cent.
“Our discussions with Premier Investments about a potential combination with their Apparel Brands business, which we announced in June, are progressing and due diligence is underway to enable us to assess these opportunities that a combination could create to deliver material value for all shareholders.”
According to Wirth, key focuses on the potential merger include enhanced scale, revenue and growth, material cost and revenue synergies across supply chain, sourcing, property and brand management, and the ability to leverage Myer One loyalty program and e-commerce platform across a large customer base.
In other news, Myer reported a 0.2 per cent lift in comparable store sales across its department stores for the first seven weeks of FY25. This is off the back of group comparable sales of 0.4 per cent for FY24.
The Myer One loyalty program is now at 10.4 million members, up 706,000 in FY24 compared to FY23, with more than half of these new members under the age of 35.