Myer has more than doubled profits in the first year of its New Myer transformation strategy, underpinned by strong sales through its concession outlets and its flagship city stores, but it's still playing catch-up with traditional rival David Jones.
Total sales grew 2.9 per cent in the full year to July 30, or 3 per cent on a comparable stores basis, despite increasing just 0.7 per cent in the fourth quarter, or 1.8 per cent on a like-for-like measure, reflecting what Myer referred to as a "more challenging environment".
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'New' Myer's first year drives profit
Myer more than doubled profits in the first year of its transformation strategy, but it's still playing catch-up with traditional rival David Jones. Catie Low comments.
The full-year total sales result falls just short of Myer's sales growth target of more than 3 per cent for 2016-20. Sales per square metre increased 5.6 per cent, a long way short of its target of a 20 per cent improvement in this measure by 2020.
The South African-owned David Jones achieved 7 per cent like-for-like sales growth for the 52 weeks to June 26, despite the warm winter weather weighing on its apparel sales.
Myer's full-year profit increased 103 per cent to $60.5 million, a result chief executive Richard Umbers put down to its delivery of in-demand brands and higher concession sales.
Full-year net profit after tax and before restructuring costs was down 10.6 per cent to $69.3 million, in line with guidance of between $66 million and $72 million and analyst expectations.
"There is no doubt that as a result of our strategy, Myer is a measurably stronger business today than it was a year ago," Mr Umbers said.
"Since August 2015, we have introduced over 850 new or upgraded brand destinations and markedly improved our customer service, particularly our flagship and premium stores."
Sales through Myer's top-flight stores in Victoria and NSW increased by an impressive 5.6 per cent on a same-store basis and customer uptake of its concession brands drove sales in this segment more than 21 per cent higher.
By comparison, sales of Myer's exclusive brands slumped 6.7 per cent and national brand sales improved just 1.4 per cent.
Operating gross profit margin fell 164 basis points to 38.7 per cent as higher sales of Myer's new brands and concession apparel failed to hold margins in the face of a weaker Australian dollar.
Myer has ramped up plans to reduce its total floor space by 20 per cent, announcing it will exit its Logan store in Queensland in fiscal 2018 and scrap plans for a new store in Darwin.
The chain will also exit space at stores in Cairns, Blacktown and Castle Hill this financial year to drive "productivity improvements and a reduction in operating costs".
"Our commitment to improving productivity has led to a reduction in operating costs and we remain focused on reshaping our store footprint and investing in stores that align with our core customers," Mr Umbers said.
These cutbacks are in addition to its previously announced store exits at Brookside, Orange and Wollongong this financial year and the decision not to proceed with planned stores at Coomera and Tuggerah.
Myer will also kick off refurbishments and upgrades at Melbourne, Sydney, Maroochydore, Eastland, Doncaster, Chatswood and Pacific Fair this year.
"During 2017 we will build on our wanted brands focus with the continued rollout of a numbers of brands including TOPSHOP, TOPMAN, Industrie, Mimco and the introduction of Saba, Oroton and John Lewis homewares.
Digital sales grew 74 per cent and Myer said profits were increasing at a faster rate than sales through this rapidly expanding channel.
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