By Aimee Chanthadavong
Major store refurbishments, investment in its omnichannel initiatives and rising ongoing operating costs, such as wages, rents and electricity have put a dent in Myer’s full year net profit for the year.
The company today reported an 8.7 per cent slip in its net profit to $127 million for the 2013 financial year.
CEO Bernie Brookes believes the business will not see signs of recovery until 2015.
“No doubt we’ve seen patchy results with consumer confidence still very soft,” he said.
“But we’re in a year of transition where there are a number of moving parts and that all involves a number costs.
“So as we transition into 2014, there’ll be an increase in operating and one-off costs as we work on major refurbishments, invest in our omnichannel strategy and store network initiatives such as floor space hand backs to better performing categories – all part of our 5-point plan.
“But I think costs will pull away by 2015 when we see returns on these investments. I anticipate there’ll be better space utilisation in growing categories like womenswear, menswear and cosmetics. By then we’ll also have more new brands and new concession stores and we’ll continue to grow our online business.
“We still see there are significant opportunities that will give us benefit and strength moving forward.”
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Myer’s total sales grew by 0.8 per cent to $3.1 billion. This was driven by its top performing categories: cosmetics, womenswear, menswear, childrenswear and accessories. Brookes said Myer’s electronics focus was squarely on the premium end of the market.
“Over the last three years we’ve exited a number of categories in electronics that we feel are too commoditised and have focused on more premium products where fashion meets technology, such as in headphones and stocking more exclusive brands like Bose and Sonos,” Brookes said.
“You can buy entertainment products like games, gaming consoles, DVDs and music online, so we’ve reduced our space availability for that category. Instead, we’ve concentrated on providing exclusive and premium products.
“Our small appliances also continue to perform well. We have no interest in stocking generic, low price point products and would rather concentrate on where fashion meets technology.”
While Myer’s online business is yet profitable, it continued to play a key role in the company’s 5-point strategy plan and saw online sales growth double from last year to more than 200 per cent.
“Our omnichannel offer has continued to strengthen and key customer metrics of online sales, page views and average monthly visits have all more than doubled since last year,” Brookes said.
“A new order management system has recently been implemented which will provide significant efficiency gains and provide customers with a more consistent experience across all channels.”