Australian department store Myer has recorded a 12.5% lift in total sales to $3.3 billion for FY23, despite just a 0.4% lift in the second half.
This sales slip continued in the first six weeks of FY24, with Myer’s store comparable sales down 1.9% over the prior corresponding period.
Myer noted the second half slump reflected a deterioration of trading conditions in the fourth quarter of FY23 as macroeconomic factors impacted consumer demand.
The company’s total sales for FY23 is the highest since 2005, with Myer citing the scale of the online business at $691 million for the year at 20.5% of total sales combined with productivity gains made in physical stores up 10% since FY19. Compared to Fy19, online sales were up 163%.
Myer’s CBD stores were reportedly the strongest channel, up 30% in FY23, or 14.4% on a comparable sales basis when lockdown periods are excluded from the prior year.
The department store also recorded an operating gross profit growth of 6.9% to $1.2 billion, with margin decreasing by 189 basis points (bps) to 36.4%, which includes an unfavourable impact of higher shrinkage and foreign exchange movements according to the company.
Cost of doing business was $824.1 million or 24.5% of total sales, with a net profit after tax (NPAT) of $71.1 million - the highest since FY15.
Myer’s statutory NPAT of $60.4 million includes implementation costs and individually significant items of $10.7 million consisting of expected closure costs of the company’s Altona and Richlands Distribution Centres and the closure of the Brisbane City store.
Net cash at period end was down $66 million to $120 million from higher dividend payments and investments. The investments include the purchase of 2,448 new point of sale devices, 3,750 mobility devices, continued investment in Myer’s in-house built team member app M-Metrics, and staff training programs.
Myer CEO John King said the results provide a foundation to deliver future plans and growth opportunities under its Customer First Plan. This includes further scaling its online offer, opening a new national distribution centre in FY24, further investment in in-store technology, refocusing merchandise through deeper relationships with key brand partners, and further rationalising its floor space and overheads.
Since the first half of 2018, Myer has exited or announced space reductions of 14.1% of total floor space, representing 151,433 square metres.
“Our multi-channel offer remains a key competitive advantage, particularly against pureplay retailers which is something they simply cannot offer their customers,” King said. “The synergies across the digital and physical environments are clearly evident, with our CBD locations delivering stronger results and online returning to growth in 2H23.”
King added that its MYER one loyalty program has also grown by 720,000 members to 7.3 million, with 4.2 million of those being active members and a 74.6% tag rate.
“We have continued to add new partnerships to the program, with the announcement of the addition of American Express and Virgin Velocity as new partners and the expansion of the CommBank program ensuring greater value for customers, and in turn new revenue streams and growth opportunities for our business,” King said.
“Overall, the Customer First Plan positions Myer to leverage the key strengths of our business. Our merchandise offer, multichannel capability, and leading loyalty program are unique strengths to provide customer value and protect profitability.
“We are excited by the pipeline of initiatives that will realise value in FY24 led by the rollout of Country Road Group and the National Distribution Centre (NDC).”
So far, 83 shop-in-shop installations have been added by Country Road Group’s five brands into Myer stores, with 93 more expected by the end of 2023.
Meanwhile, Myer’s chief financial officer Nigel Chadwick will retire from his position in early 2024, and will be succeeded by the deputy CFO Matt Jackman from February 1.
Matt has been with the Myer business for over six years, having previously worked in finance leadership roles at Toll Group after starting his career at KPMG.
The Myer board thanked Nigel for his contribution over the last six years.