Myer’s $486 million loss was bigger than its entire market cap

Photo: Sam Tabone/WireImage
  • Myer has posted an annual loss of $486 million. Underlying annual net profit of $32.47 million, down 52%.
  • Sales down 2.7% on a comparable store basis.
  • John King, the new CEO, says: “Shareholders deserve better”.

Myer posted a 52% fall in underlying annual net profit to $32.47 million as the department’s store’s strategy to resurrect growth crumbled.

Revenue fell 3% to $3.1 billion and sales were down 2.7% on a comparable store basis.

Restructuring, store exit costs and impairment of assets of $541.2 million brought the company to a loss of $486 million, or about $200 million bigger than the company’s market capitalisation.

Myer shares went on a steep slide in early trade. A short time ago, they were at $0.395, down 9%, bringing its market cap to about $285 million.

No dividends were declared.

The company has been cutting costs, ditching managers and executives, negotiating rent reductions and done a better loan deal with banks.

The company refinanced its loans, lowering net debt by $6 million to $107 million and improving net cash flow. The new debt facility totals $400 million.

And online sales are improving, up 34% to $192.5 million. Sales by Myer staff using iPads within the store were $30.8 million and click and collect sales jumped seven percentage points to 19% of orders.

Chairman Garry Hounsell says the financial results are 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,” he says.

John King, an experienced fashion retailer, was appointed Chief Executive Officer and Managing Director in June. Allan Winstanley is the new Chief Merchandise Officer and Nigel Chadwick Chief Financial Officer.

“With these appointments, Myer bolstered its global retail and financial expertise, bringing best-in-class experience with highly relevant retail, merchandising and financial skills,” says Hounsell.

During the second half, sales were down 2.6% to $1.38 billion. Comparable store sales were down 2.4%.

King, the new CEO, says “shareholders deserve better”.

“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,” he says.

“Our plan is to put our customers first in everything we do. 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.”

Myer plans to launch a new website later this month, with enhanced overall user experience, in particular on mobile devices, with faster search capability, clearer filtering and navigation, and improved presentation of merchandise.

King says costs have been cut in areas that do not directly benefit the customer or enhance their experience in store or online.

“This includes removing a number of executive and management roles to put in place a more streamlined and accountable structure at the Support Office that is more closely aligned with our customers,” says King.

The 2018 numbers: