September 29, 2020

Myer’s online sales soar 61% but net loss slumps to AU$172m due to COVID-19

Myer has posted its full-year results, highlighting how the company achieved record online sales, but it was not enough to keep the company from being in the red.

For the period ending 25 July 2020, the Australian retail giant saw group online sales soar 61% to AU$442.5 million. In the 2H20 alone, online sales lifted 99% year on year. Group online sales included sales from Sass & Bide, Marcs, and David Lawrence, but excluded sales via in-store iPads.

The most popular categories were beauty and homewares that saw online sales skyrocket by 218% and 177%, respectively, during the full year.

Meanwhile, Myer Online sales, which excludes Sass & Bide, Marcs, and David Lawrence, reached AU$405 million in FY20.

Myer CEO and managing director John King pinned the acceleration of online sales to the work the company has undertaken to improve its online channels.

“During the past two years, Myer has undertaken significant improvements to the website including enhancing infrastructure and peak capacity, and improved search and check out functionality. Together with improved fulfilment, these enhancements have underpinned the significant growth in sales as well as a 50 basis point improvement in conversion, and an improved gross profit for the online channel,” he said.

Despite online sales making up 17% of total sales, Myer still saw total sales drop 16% from AU$3 billion recorded during FY19 to AU$2.52 billion. Myer blamed the widespread store closures due to COVID-19 for dampening results.

All Myer stores were closed for the majority of April and May, which resulted in approximately 10,000 team members being stood down.

“The decision taken in March 2020 to temporarily close all 60 stores and stand down approximately 10,000 team members was one of the toughest decisions Myer has faced in its 120 years of operation. All stores were closed for the majority of April and May,” the company said.

“For the majority of the second half, there was substantially reduced traffic to physical stores, particularly to those located in CBD locations. Myer’s CBD stores represent some of its  largest stores with high associated rents, and staffing requirements and therefore the impact on profit as a result of the reduced revenues was exaggerated.”

Myer said it expects low foot traffic in its CBD stores to continue for the foreseeable future.

See also: Map shows how COVID-19 has a major impact on e-commerce (TechRepublic)

As a result of the impact from COVID-19, the company concluded the year with a statutory net loss after tax of AU$172.4 million, while earnings before interest, tax, depreciation, and amortisation plummeted 42% from AU$160 million to AU$93.5 million during the financial year.

To recoup losses, King outlined that, as part of the company’s COVID-19 response plan, it will focus on enhancing its myer.com.au site, simplify business processes, and accelerate cost reduction, among other priorities. There are also plans to lift efficiency from factory to customer through centralising its fulfilment channel, which is due to commence this month.

Myer also indicated that key investments to lift its online business and enhance the omni-channel experience were also brought forward during the year. Some of those deliverables included migrating Myer Marketplace to myer.com.au, improving online user experience, and partnering with the likes of Amazon and Australia Post to improve customer convenience.

“In August 2020, Myer announced it had entered into a multi-year agreement with Australia Post to provide warehousing and online fulfilment services, to further enhance the company’s ability to provide an efficient and fast online experience for customers,” King said.

“These new warehouse and fulfilment arrangements will underpin the next stage of growth in Myer’s online business, to further strengthen the fulfilment capacity and improve efficiency, delivering benefits to Myer’s customers as well as providing significant cost savings.”

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