In an ASX announcement Wednesday, retail company Myer Holdings Ltd (ASX: MYR) released its half-year financial report to the market.
Myer Holdings is one of Australia’s largest department store operators, along with David Jones. It is partly owned by another ASX-listed retailer, Premier Investments Limited (ASX: PMV).
In the half-year ended 27 January 2018, Myer reported a 3.6% fall in sales, to $1.72 billion, compared to the same half a year earlier.
“Since becoming Executive Chairman, I have been driving the management team to trade the business more aggressively,” Chair Garry Hounsell said.
“To achieve this, I have renewed the entire team’s focus on product, price and customer service. These are strongly endorsed by the Myer Board.”
Myer’s online business reported sales growth of 48.9%, with Hounsell calling it, “one of the largest and fastest growing online businesses in Australia.” It reported sales of $105 million during the half.
Profit Falls
A net profit from last year turned into a loss of $476 million in the recent half. However, before implementation costs and significant items were incurred, Myer said net profit was around $40 million, down from $63 million last year.
During the half, Myer incurred impairment charges to its ‘goodwill’ and brand name to the tune of $500 million and took a $6 million accounting charge for other assets.
CEO Change, Strategy Shift
Myer is attempting to tackle years of declining profit with a new strategy. However, Myer noted some poor execution of the initiatives.
Myer said: “the execution of strategic initiatives could have been better managed, for example, some elements of the strategy, which targeted a new high value customer were rolled out too quickly and didn’t balance enough attention on Myer’s traditional customer base, adversely impacting profitability,”
Myer is currently recruiting a new CEO, following the departure of Richard Umbers in February 2018.
We’re going to turbocharge a number of things that we’ve been looking at,” Mr Hounsell said at the time. “I’m going to have an absolutely different sense of urgency than Richard might not have had because he was executing a strategy that he embarked upon three or so years ago.”
Dividends?
Unfortunately, Myer’s board determined that an interim dividend was not appropriate given the half-year result and a “challenging retail trading environment.”
Summary
Looking beyond the half-year, Myer said week-to-week volatility continues to exist but it is investing in price competitiveness and sales have improved.
Over the past year, it has been somewhat of a volatile ride for retail companies, with investors reacting to the results from JB Hi-Fi Limited (ASX: JBH), Harvey Norman Holdings Limited (ASX: HVN) and Myer amid heightened online competition.
In December, e-commerce giant Amazon.Com Inc (NASDAQ: AMZN) began trading in Australia, with some fearing it could use its huge resources to expand aggressively in the local market.
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