Myer’s FY18 results reveal a year of “obviously disappointing” performance, but the company plans to win back customers with a new website and management team.
Myer today announced its financial results for the full year 2018, and the news is not good for the Australian department store. Total sales were down by 3.2 percent (and 2.7 percent on a comparable store basis), coming to $3,100.6 million, and operating gross profit declined 2.9 percent to reach $1,184.4 million. Cost of doing business meanwhile went up 1.5 percent, totalling $1,035 million.
The company openly acknowledges the poor numbers, with its leaders describing the results as “disappointing”.
“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,” says Chairman Garry Hounsell.
These changes included appointing John King as CEO and Managing Director, a role in which he immediately began making significant updates.”These results are obviously disappointing and shareholders deserve better,” says King says of the FY18 numbers. “Since joining Myer in June 2018, I have completed a thorough review of the business, including visiting 44 stores and have met with customers, team members, suppliers, brand partners and landlords.”
Myer’s net profit after tax came in at $32.5 million, less than half of the $67.9 million reported in FY17. Last year’s full-year financial results were also in decline, with sales down 1.4 percent, which points to long-term difficulties for the business rather than a temporary slump.
King recently cut 30 executive jobs, part of his strategy to strengthen Myer as a customer-first business. “Our plan is to put our customers first in everything we do,” he says. “We are refocusing our efforts on marketing and our product offering. We know our customers want high quality, on trend products, at the right price, supported by great customer service. 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.”
With Australian retail figures expected to flatline in the usually profitable holiday period, even King’s determined efforts may not be enough to push up sales in the short term. However, the company’s ‘Customer First’ plan has several focus areas that may reshape its image in the long term.
These focus areas include Myer-exclusive brands and categories, a better in-store customer experience, and a new website to be launched later this month. With online sales accounting for $239.4 million of the company’s income in FY18, the move to update its online platform is important.
King says the new website “will significantly enhance the overall user experience, in particular on mobile devices, with improved and faster search capability, clearer filtering and navigation, improved presentation of merchandise and clearer, more engaging brand and editorial journeys.”
Myer is not the only struggling department store. Its major competitor, David Jones, also reported significant losses in FY18. With the increasingly digitised retail industry changing so much from these companies’ glory days, it isn’t surprising that their businesses would need to adapt to survive. Myer’s dramatic leadership changes and new initiatives show a willingness to change, and it will be interesting to see how their earnings compare at the end of FY19.