For the first time in nine years the retailer has recorded a full year profit.
Myer has posted a profit of $24.5 million for the year ended 30 June, 2019, following a loss of $486 million in FY18, by reducing costs and improving efficiencies. It is the first time the department store has reported a full year profit in nine years.
However, total sales were down 3.5% to $2.99 billion and comparable store sales decreased 1.3% excluding sales in Apple products, after exiting the partnership in May.
The online business has now become Myer’s largest store, with sales up 25.6% to $262.3 million. Digital sales (online sales and sales via in-store iPads) were up 21.9% to $292.1 million, now representing 9.8% of total sales.
Myer CEO and managing director, John King said, “This result demonstrates our focus on profitable sales, a disciplined management of costs and cash, as well as deleveraging the business. In the first year of the Customer First Plan, we made progress with a number of strategic initiatives, but recognise there is much more to be done to transform this business.”
Improving store productivity a key priority
King said the department store made progress working with landlords, through a portfolio partnership approach, to reduce footprint and refurbish stores to transform the customer experience.
During the financial year, refurbishments were completed at Maroochydore (QLD) and Castle Hill (NSW) and in May, it was announced that Belconnen (ACT) would remain open, reversing an earlier decision to close it.
Cairns (QLD) will be refurbished from January 2020 with the hand back of one floor. Myer has also agreed to exit level four of Emporium Melbourne (VIC) from May 2020. Logan (QLD) was closed in January 2019 and Hornsby (NSW) is scheduled to close in January 2020. All clearance floors will also be removed post-stocktake from January 2020.
“We improved store layouts and brand adjacencies in 34 stores, which in many stores included the introduction of new brands. Significant opportunities remain across our network for space hand backs or closures and these discussions will continue with landlords,” King said.
Further, an additional level was vacated at Myer’s support office with a number of management and administrative roles leaving the business during the year.
Plans to push online growth further
Myer launched its new website in September 2018 and has plans to further invest in improving its online platform. During Q4, progress was made to close the gap between in-store and online ranges with the implementation of the Myer Product Enrichment Portal.
“The portal simplifies and automates the process of new product on-boarding and enrichment, resulting in cost and time savings for the merchandise and online teams,” King said.
“Both traffic to the site and conversion improved and overall fulfilment costs per order were down 13.5% during the period. However, we did encounter some issues during peak trading which lead to an increase in costs during that time. We plan to resolve these issues through a combination of an increase in fulfilment stores, holding some stock in DCs and converting some underutilised store floors into fulfilment centres.”
New supply chain executive appointed
King confirmed that Myer’s longer term warehousing and supply chain solution will be finalised during 2020 under the leadership of new executive general manager of supply chain, Tony Carr.
Carr brings extensive global experience in factory to customer having built word class fulfilment for retailers including ASOS. He is due to commence his role with Myer in October.
“We are confident that significant savings exist in our supply chain as well as efficiencies with a planned centralised distribution model in future years,” King said.