Myer mired by first loss since public float mired

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DEPARTMENT store giant Myer is looking to optimise its retail offering, boost online sales and consolidate floor space after it posted a $486 million loss for the 2018 financial year, prompting it to admit that its shareholders “deserve better”.

It marks the first full-year loss for Myer since listing on the ASX in 2009.

Seen by some experts as one of the most vulnerable in Australia’s post-Amazon retail industry, Myer’s loss was largely due to its $515 million write-down of goodwill and brand names, as well as $14 million in redundancy and store exit costs, which came alongside the exit of chief executive officer Richard Umbers.

The slide has also seen the misadventures of its own label sass&bide and an investment in collapsed UK label Topshop, as well as public criticism by retail identity Solomon Lew, whose Premier Investments has a 10.8% stake in Myer.

Before the significant items, Myer’s net profit after tax for FY18 was $32.5 million, down by 52.2%. Operating gross profit declined by 2.9% to $1.1844 billion and margin lifted by slightly to 38.2%. No dividends will be paid.

“The FY2018 financial results are disappointing,” chairman, Garry Hounsell said.

“When it became apparent to the Board that the execution of the strategy was not going to deliver an improved financial performance, we made the decisive move to make significant leadership changes.”

Umbers’ removal gave way to the recruitment of John King as chief executive officer and managing director, who had overseen the transformation of UK department store House of Fraser, and managing director in June, Allan Winstanley as the chief merchandise officer, while Nigel Chadwick had come in as chief financial officer in January.

“These results are obviously disappointing and shareholders deserve better,” King said. “We will be focused on delivery and execution, not promises.”

The group will continue to walk back initiatives and benchmarks that were introduced with its “New Myer” plan.

Sales were down by 3.2% to more than $3.1 billion over the year, and by 2.7% on a comparable store basis. Total online sales were $239.4 million

“With this customer in mind, we are making changes to our product ranges, store layouts, and online offering and we have worked to influence how we will trade Christmas 2018.”

Clearance floors will be eliminated throughout 2019, while further store closures are unlikely, with King suggesting that surplus floor space could be handed back to landlords that might find a better use in food and services operators. Myer has already started slimming down space used for lingerie and homewares, which don’t materially impact sales numbers.

Myer will launch a new website later this month.

It has signed a binding term sheet with existing lenders to refinance its $400 million bank facility, extending the maturity from August 2019 until February 2021, giving it more time to turnaround its performance.

Australian Property Journal