​Myer's online business grows 70 percent

Less than a year into its New Myer strategy, Myer has reported that in 1H16 online profitability exceeded sales growth during the period.

Myer has announced that during the first half of the 2016 financial year, revenue from its online business grew by 70 percent on the prior year, a growth in profitability that exceeded sales growth.

Myer CEO and managing director Richard Umbers has attributed the growth of its online business to the early progress of its New Myer strategy, which saw the introduction of over 2,500 iPads to its stores, a strong uptake of Click and Collect, and its digital catalogues made shoppable.

Umbers went on to highlight that the recent launch of the Myer eBay store, which features 20,000 products, has further extended the Myer brand reach, noting seven out of 10 Australian shoppers are using eBay.

"Our first wave of initiatives to deliver wanted brands, enhanced customer service, and an improved omni-channel experience have helped deliver comparable store sales growth of 7.1 percent across 12 Victorian and New South Wales Flagship and Premium stores. This is a very encouraging result. We have a significant pipeline of further improvements and the team has a strong focus on execution," he said.

The company also reported total sales lifted 1.8 percent to AU$1.8 billion, up 3.3 percent on comparable store sales basis.

At the same time, earnings before interest, tax, depreciation, and amortisation (EBITA) reached AU$138.5 million, from last year's AU$145.3 million; and net profit after tax (NPAT) was also down 4 percent to AU$59.7 million.

Umbers said the decreases were consistent with expectations at the early stage of its transformation project.

Looking ahead, the company said it will continue to accelerate the roll out of its New Myer initiative, which it believes will lead to increased costs and capex. Part of the initiative, according to Myer, will include the company providing seeding fund for key technology projects, which are expected to underpin the company's focus on delivering an omnichannel experience.

Myer also provided revised guidance for FY16, expecting that NPAT will be between AU$66 million and AU$72 million, instead of AU$64 million to AU$72 million; and pre-tax implementation costs associated with New Myer will be in the range of AU$20 million and AU$30 million, instead of AU$35 million and AU$45 million.

Myer first announced its New Myer plans in September last year, saying that over the next five years the company will invest more than AU$600 million in total capital and implementation costs on delivering an improved customer service.

Specifically, the New Myer plans will include approximately AU$150 million capex and implementation costs to be spent on creating "wonderful experiences" in its stores, such as rolling out digital hubs and Wi-Fi; and another AU$100 million capex and implementation costs will go towards further enhancing its omnichannel shopping.

Umbers said at the time that data analytics of its customer base and store catchments would form the foundation of the strategy.

"From this analysis we have identified the necessary actions to make Myer's stores, range, and services more attractive to our primary customers who shop at Myer," he said.

Myer also established a Transformation Office to oversee the implementation. It will be responsible for coordinating the execution of projects under the New Myer strategy and managing change across the business.