Annual Report to Shareholders

Myer's 2024 annual report reveals a 2.9% decrease in total sales to $3.27 billion, but positive comparable sales growth of 0.4%, driven by a 2% increase in online sales.

Summary

• Myer's total sales decreased by 2.9% to $3,266.1 million in FY24 compared to FY23.
• This decrease is attributed to the closure of some stores (Frankston, Brisbane, and Werribee).
• Despite the decrease in total sales, Myer's comparable sales increased by 0.4%, showing improvement.
• Online sales grew by 2.0% to $704.3 million, representing 21.6% of total sales.
• Operating gross profit decreased by 2.5% to $1,194.4 million, but the gross margin rate improved by 15 basis points to 36.6%.
• Net profit after tax decreased by 26.0% to $52.6 million due to store closures, challenging trading conditions, and inflationary pressures.
• Statutory net profit after tax was $43.5 million, including $9.1 million in implementation costs and individually significant items.
• Operating cash flow increased by $8.0 million to $250.4 million, and net cash at the end of the period was $113.8 million.
• Myer's MYER one loyalty program has over 10 million members, with 4.4 million active members and a 77.2% tag rate.
• In-store customer satisfaction reached a record high of 85%.
• Myer's new national distribution center experienced delays, increased costs, and complexity issues.
• A final dividend of 0.5 cents per share was declared, bringing the total FY24 dividend to 3.5 cents per share.

Sentiment

Score: 5

Explanation: While the report highlights some positive developments like improved customer satisfaction and online sales growth, the overall financial performance was weaker than expected, leading to a moderate sentiment score.

Positives

• Comparable sales growth of 0.4% despite challenging trading conditions.
• Online sales growth of 2.0% to $704.3 million.
• Improved gross margin rate of 15 basis points to 36.6%.
• Record high in-store customer satisfaction rating of 85%.
• Strong performance of the MYER one loyalty program with over 10 million members and a 77.2% tag rate.
• Increased operating cash flow of $8.0 million to $250.4 million.

Negatives

• Total sales decreased by 2.9% to $3,266.1 million.
• Significant decrease in net profit after tax of 26.0% to $52.6 million.
• Statutory net profit after tax of only $43.5 million.
• Delays, increased costs, and complexity issues with the new national distribution center.
• Underperformance of sass & bide, Marcs, and David Lawrence brands.

Risks

• Unstable macroeconomic factors (fluctuating Australian dollar, increasing interest rates, inflation, poor consumer confidence).
• Disruptions in the global shipping industry leading to delays and increased freight rates.
• Highly competitive Australian retail industry with increased online competition.
• Potential impact of future pandemics.
• Technology risks, including cybersecurity vulnerabilities.
• Risks to brand reputation.
• Failure to deliver on strategic plans.
• Challenges in attracting and retaining talented employees due to low unemployment and labor shortages.
• Regulatory investigations and disputes.
• Potential for legal proceedings and claims.

Future Outlook

Myer is undertaking a comprehensive strategic review to improve profitability, drive sustainable earnings growth, and enhance its market position. The review is assessing various aspects of the business, including the product offering, brand portfolio, store network, and loyalty program. Preliminary findings suggest prioritizing the growth of Myer's private label and exclusive brands, and the Board is exploring a potential combination with Premier Investments Apparel Brands.

Management Comments

• 'We are laser-focused on improving our profitability, performance and shareholder returns.'
• 'Despite the tougher trading conditions, work undertaken by the Myer team in recent years has helped stabilise the business and established a foundation for future growth.'
• 'Myer has achieved a major milestone with our new OmniStore point of sale system, which significantly improves the customer experience in store, delivering quicker transaction times and greater interactivity at the checkout.'
• 'Myer is continuing to strengthen its strategic partnerships with key brand partners to enhance commercial success.'
• 'Accelerating and unlocking the MYER one program remained a key strategic focus for FY24, as we drive deeper engagement with our growing base of over 10 million members, achieving another record year for MYER one engagement.'

Industry Context

Myer's results reflect the broader challenges faced by Australian retailers in a tough macroeconomic environment. The strategic review and potential acquisition of Premier Investments Apparel Brands indicate Myer's efforts to adapt to evolving consumer preferences and compete effectively in a dynamic market.

Next Steps

• Completion of the strategic review.
• Progressing discussions with Premier Investments regarding a potential acquisition of its Apparel Brands business.
• Continuing to expand team development programs.
• National rollout of paper shopping bags in 2025.
• Addressing delays and cost overruns at the new National Distribution Centre.

Key Dates

Keywords

Myer, Annual Report, Retail, Department Store, Financial Results, Online Sales, Loyalty Program, Customer Satisfaction, Strategic Review, Comparable Sales, Net Profit, Dividend