Myer continues to make good progress adapting itself to the changing retail environment.
As part of delivering its five point plan, the company has concentrated on strengthening its merchandise and omni-channel offer, markdown management, further shrinkage reduction, improved store lease terms and further capitalising on its MYER one program. This has been all underpinned by improved customer service where Myer invested an additional $13 million in the first half of 2012.
Bernie Brookes, Myer chief executive officer, said delivering the company’s half-year results that the business has made good progress on delivering its strategic plan in the first half and that there continues to be a number of opportunities to further improve the business in this challenging retail environment.
“Our strong operating gross profit margin was driven by growth in MEBs, as well as progress in space optimisation, reducing markdowns and shrinkage, and improving product sourcing,” he said.
“We have continued with our strategy of a targeted and measured investment in improving customer service. The positive customer and team member response to over 450,000 extra hours, improved product knowledge and training has certainly been encouraging.”
But the changes hasn’t been enough to help conquer the low consumer sentiment, reporting the biggest drop in half-year earnings since it was floated in November 2009.
Net profit after tax was $87.3 million, down 19.8 per cent, while sales was down 1.7 per cent to $1.7 million. In sales growth terms this was an improvement where in the first quarter, Myer reported sales dropped 3.5 per cent and 0.4 per cent in the second quarter. Nonetheless the company expects this trend to continue into the second half of the financial year.
“We have seen improvement in trading between the first and second quarters with a continuation of the second quarter trend into the second half of 2012. However, unless the sales trend improves from the current levels, total 2012 financial year sales are likely to be below or at best flat compared to financial year 2011,” Brookes said.
The best performing categories in the first half were Miss Shop (Youth), Womenswear, Childrenswear and Cosmetics.
The Electrical category continued to be impacted by planned category exits and rationalisation in white goods, consoles and gaming, music, DVDs and navigation systems, impacting sales by $22 million in the first half.
“We are replacing this space with higher margin categories,” Brookes said.
Within the Electrical category there were strong sales in Appliances and Home Office which partially offset the ongoing significant price deflation in TVs.
The best performing states were Western Australia and South Australia reflecting the first two states that received the investment in improving customer service.
Brookes reaffirmed the company’s full-year profit guidance to be no worse than 10 per cent below the results of 2011 financial year of $162.7 million.
“Despite the challenging trading environment there continues to be a number of opportunities to further improve the business,” he said.
“Myer continues to be very well placed to benefit from any improvements in discretionary retail conditions when they occur.”
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