Myer's online business doubles as net profit dips

Myer has reported that during the 2014 financial year, visits to its website grew by 74 percent to 38 million visits, but it still wasn't enough to lift its net profit, which was down 22.6 percent.
Written by Aimee Chanthadavong, Contributor

Continued momentum in delivering its omni-channel strategy as part of the company's five-point plan has helped Myer double its online sales for the 2014 financial year.

The department store giant reported that earnings before interest, tax, depreciation, amortisation (EBITDA) for the full year was down 17.1 percent to AU$252.6 million, and net profit after tax was down 22.6 percent to AU$98.5 million.

Despite this, total sales for the full year were at AU$3,143 million, up 1.2 percent on a comparable sale basis, and total sales for the fourth quarter were at AU$759.4 million, up 2.1 percent on a comparable store sales basis.

Myer attributed part of the lift in total sales for the full year to the growth in online sales where its website saw visits grow by 74 percent to over 38 million visits, mainly due to an expansion in its online product range, enhanced product information, greater content, and improved electronic direct marketing.

According to Myer chief executive Bernie Brookes, its online business currently makes up approximately just over 2 percent of the total business, but there are plans to grow that to 10 percent "over the next few years".

"Our number one priority is to have a stable website all the time. In November, we took significant steps to upgrade it to effectively deliver better navigation. As a result, we saw an immediate increase in basket size and order value," he said.

"We continue to exponentially grow our online offer. The basket size and order value increase is a sign we're on the right track. Conversion value for the year increased by 63 percent."

Brookes also addressed the website outage that the company suffered during the post-Christmas sales, saying that it was disappointing, but it had nothing to do with lack of infrastructure.

"We've invested significant money, over AU$300 million, in the last few years into IT. The outage took place between a blockage between the servers ... it wasn't because of the lack of infrastructure spend," he said.

"We left the site down for a few days because we wanted to test and test before it went live again. But since that day, we have been stable and have had record sales day since; three out of the next four days we had record sales day. We learned from then, and continue to test online to not only ensure we are customer friendly but reliable."

Myer said part of the share of online sales increase was due to the lift in sales via mobile and tablets, which is reflective of the 370,000 downloads of the Myer app during the year.

Additionally, the company's rollout of 1400 iPads to all of its stores is under way, with hopes that it will not only enable team members to improve customer service, but also help expand the range available in its stores.

"It's our competitive advantage that we plan to build over the next few years," Brookes said.

Brookes acknowledged that 'Click & Collect' continues to be another positive facet of the business, and there are plans to roll it out to all of its stores. It currently makes up 4.5 percent of its total online sales.

The company also reported it continues to improve its customer service proposition through its online booking service for personal shopping, as well as with Santa visits, which Brookes said was a "runaway success", and hinted that there will be more opportunities of expanding that service going forward.

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