Online sales a bright spot among unsatisfying first half for Myer

The department store chain's online presence is now effectively the company's third-largest store.
Written by Chris Duckett, Contributor
(Image: Shutter Speed Photography)

Myer executive chair Garry Hounsell has labelled the company's first-half results as unsatisfactory, and said it was brought about by a number of execution issues.

Over the six months to January 27, Myer saw a 4 percent drop in sales to AU$1.72 billion; earnings before interest, tax, depreciation, and amortisation (EBITDA) fall by 24 percent year on year to AU$108 million; and net profit after tax collapse by more than AU$500 million to be recorded at negative AU$476 million.

The net profit figure contained a goodwill and Myer brand name impairment of AU$515 million pre-tax, among a one-off significant items hit of AU$538 million before tax.

"My ongoing engagement with customers, team members, supplier partners, and external stakeholders has reinforced my view that Myer must regain its historic reputation for great value and customer service," Hounsell said. "The work on value is progressing well and with the right training, together with appropriate incentives and supported by technology, our team members can deliver on our customer service aims."

In its results, the company called out the performance of its online store, which, along with its loyalty business, are being looked at to become separate business units.

Online sales increased 49 percent year on year to AU$105 million, with its Click and Collect sales making up almost one-fifth of purchases. The company said its online store is now its third-largest store, and that it will continue to invest in the area.

Myer said it is still looking for a new CEO following the departure of its chief executive and managing director Richard Umbers in February, and the shifting of Hounsell from chair to executive chair.

"We are impatient for a turnaround in the company's performance, and the board has determined that it is in the interests of all shareholders for there to be a fresh approach to drive our future direction," Hounsell said at the time.

"At the time of my appointment as chairman in November 2017, I said I was impatient, and this announcement reflects my desire to drive, first-hand, the urgency required to deliver shareholder value."

At the end of last year, Amazon finally launched in Australia, ending months of speculation.

The launch of Amazon down under was expected to shake up the retail space in Australia, despite many organisations having years to prepare for such a company to enter the local market.

Australian Competition and Consumer Commission (ACCC) chair Rod Sims offered his support for the online retail giant's arrival, noting that the launch would be good for consumers.

"It is hard to see otherwise than that Amazon's entry into Australia will be good for consumers, despite it not being good for incumbent retailers," Sims said to the RBB Economics forum in late November.

The ACCC has even been asked to "act against Amazon's business model" by some of Australia's retail incumbents, he added.

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