Myer in for patchy retail environment, Brookes says

18 Mar '11

3 min read

Myer, Australia's largest department store group, announced first half results for 2011.

Bernie Brookes, Chief Executive Officer commented on the results:
“This is a solid result, in the context of a very challenging and patchy retail environment.

“As we announced on 7 February 2011, trading in the past six months has been characterised by ongoing fragile consumer confidence and a highly competitive market with widespread discounting.

“We, like other discretionary retailers, observed a consumer who is not only more cautious to spend and has an increasing tendency to save but is concerned about a variety of cost imposts on household disposable expenditure such as additional taxes, utilities, health care, and petrol costs, as well as interest rates.

"While our sales and EBIT results reflect this trend, we were able to improve our operating gross margin through a number of business improvements including further reductions in shrinkage, further growth in Myer Exclusive Brands and improved sourcing.

“The conscious and planned decision to exit whitegoods and re-engineer our music business will deliver long-term benefits as a result of optimising returns, but had a negative impact on our electrical business during the half. In addition, price deflation on large screen TVs and electrical entertainment items in general impacted sales proceeds for the half.

“We continued our disciplined focus on costs, with overall costs down slightly despite some previously forecast one-off costs associated with the rebuild of Myer Melbourne, the opening of Robina and our new Point-of-Sale (POS) system.

“The conscious and planned decision to exit whitegoods and re-engineer our music business will deliver long-term benefits as a result of optimising returns, but had a negative impact on our electrical business during the half. In addition, price deflation on large screen TVs and electrical entertainment items in general impacted sales proceeds for the half.

“We continued our disciplined focus on costs, with overall costs down slightly despite some previously forecast one-off costs associated with the rebuild of Myer Melbourne, the opening of Robina and our new Point-of-Sale (POS) system.

“We continued our disciplined focus on costs, with overall costs down slightly despite some previously forecast one-off costs associated with the rebuild of Myer Melbourne, the opening of Robina and our new Point-of-Sale (POS) system.

“We also maintained a rigorous focus on inventory, and excluding non comparable inventory held for new stores and the music business, we ended the period with an inventory position down on last year.

“With continued strong cash flow, a strengthened balance sheet and an improved debt position, the Directors have declared an improved interim dividend of 11 cents per share, fully franked.

“In the face of tough trading conditions, we stayed focused on our strategy and redoubled our efforts, completing a number of exciting initiatives designed to underpin our growth. We opened two new stores at Top Ryde in New South Wales and Robina in Queensland. Trading at our flagship Myer Melbourne is continuing to gain momentum since the redevelopment was completed, with all floors open from early February.

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