February 7, 2023

Myer’s sales drop, store closures offset by online

Myer’s total sales dropped almost 16 per cent to $2.5 billion for the financial year after widespread store closures resulting from the pandemic.

This year’s results show a net loss of $172.4 million for the financial year, compared to the net profit of $24.5 million in the previous financial year.

However, the department store’s online sales have increased by 61 per cent as shoppers change their buying behaviour.

Online sales grew 99 per cent in the second half of financial year 2020 compared to the prior year. The significant increase in online sales made up 17 per cent of total sales for the department store.

The growth in online sales was bolstered by agreements with Australia Post and Amazon announced last month.

“We’ve seen significant growth in our online business since COVID-19,” Myer CEO John King said. “There was particularly strong growth in beauty, up 218 per cent, and homewares, up 177 per cent.”

Myer’s recent introduction of Amazon Hub – Amazon parcel pick-up points at Myer Click & Collect counters – were introduced in 21 Myer stores across Australia yesterday.

The deal with Australia Post has also helped to deliver products to customers. “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,” Mr King said.

The department store saw reduced traffic to stores mainly in the CBD areas as more people started working from home.

As Myer closed all 60 stores in April and May, it cut wages and stood down approximately 10,000 team members.

“Closing the stores is one of the toughest decisions faced in our history,” Mr King said, adding that a key focus has been on safety.

Ongoing restrictions in Melbourne are still affecting store closures.

“As restrictions ease we will focus on providing safety to customers,” Mr King said.

“When the COVID-19 pandemic first hit, we acted to prioritise the health and wellbeing of our customers, team members, and the broader communities in which we operate,” he commented

Myer relied heavily on government support to keep paying wages as it saw its profits drop and cash flow fall by $31 million.

The retailer received $93 million in JobKeeper payments, while $41 million was paid to employees whose remuneration was lower than the required income threshold.

“Wages fell by $73 million as we stood down many staff,” Myer CFO Mr Chadwick said, adding that the department store saved around $29 million due to staff costs and pay reductions as well as cuts to marketing and travel.

As more people are stuck at home, Myer has seen changed behaviour in its customers with items such as cooking appliances, casualwear and athleisure becoming more popular.

“Myer looks ahead to a permanently-changed CBD landscape with workers working from home,” Mr King commented.

Myer also plans to lower the threshold of its Myer One program in the hope to see more customers join the program.

Mr King commented that the department giant has plans to grow the business to $1 billion over the coming years. “We have aspirations for this to be a billion-dollar business,” he said.

The department store has extended it debt facility, which is worth $340 million, for two years.

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