Myer Holdings Limited (ASX: MYR) is in the business of operating departmental stores in Australia. Company’s product range includes men’s wear, women’s wear, children’s wear, cosmetics, apparels, toys, electrical goods and general merchandise.
The retailer has witnessed many ups and downs in the past couple of years and FY18 performance was not at all up to the mark. Financial result for the year ending 28 July 2018 demonstrated a Net Profit After Tax of $32.5 million. The total sales of the company have been $3,100.6 million which was 3.2% less than the previous year. Total sales made online were $239.4 million. The operating gross profit of the company declined by 2.9% to $1,184.4 million. The operating gross profit margin increased by 8 basic points to 38.2%. The Cost of doing business also increased by 1.5% to $ 1,035 million while inventory decreased by 1.5% to $366.8 million. Company witnessed positive net cash flow of $6 million which resulted in lower net debt of $107 million. This positive net cash flow and lower net debt has demonstrated capital discipline in the company. The company has extended the debt maturity of its bank facility to February 2021. This will help the company to improve the Financial performance for next 2.5 years.
The total online sales of $239.4 million represented 7.7% of total sales. The online sales have increased by $34.1 million to 192.5 million in FY 2018. Myer’s click and collect website collected 19.3% more orders compared to last year. Company has also decided that no final dividend will be paid. Myer is now focusing on reducing the cost through back office efficiencies, space reduction, store restoring and procurement savings. To cut down the cost which do not directly benefit the customer, the company has removed many executives and management roles to have a more streamlined and accountable structure at the support office.
Company’s board has made significant Leadership changes which include appointment of new CEO John King in June 2018. In the first 100 days of CEO, John King has planned store visits and interaction with customers and team members. He has also set meetings with supplier, brand partners and landlords. He has reviewed the product ranges, store requirements and store layouts. He has also reviewed operating model, accountabilities and operating cycle. After which the company refocused it efforts on product offering and marketing. Company intends to provide high quality products to its customers with right price supported by great customer service. The company is making changes to its product ranges, online offerings and store layouts. Company is planning to launch a new website with better navigation and improved presentation which will enhance the overall experience of the customers.
In the past three months, the company’s share price increased 43.90% from $0.41 to $0.590 as on 17 September 2018. The stock was again down 2.7% as at September 19, 2018 (12:50 PM AEST) post a 35% rise witnessed in last five trading days. It is now to be seen whether this beaten down stock will be back on track with any support from strategic changes along with leadership restructuring. As per consensus estimates, the earnings per share in the next one year may slip drastically.
The Income available from dividends remains attractive for many investors.
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