Myer FY24 Earnings Call Highlights

Myer (ASX: MYR) shares dipped as much as 12% in early trade on Friday after its FY24 result flagged challenging trading conditions and the underperformance of brands including Marcs and David Lawrence.

FY24 Earnings Summary

• Total sales down 2.9% to $3.26 billion, in-line with guidance

• Cost of doing business up 1.3% to $834.7 million

• Net profit after tax down 26% to $52.6 million, with approximately half of decline attributable to underperformance of Sass & Bide, Marcs and David Lawrence

• Total 2024 dividend of 3.5 cents per share (2023: 9 cents per share)

• Strategic update – Cease sale process of Sass & Bide, Marcs and David Lawrence, and explore a potential combination with Premier Investment's Apparel Brands

• Trading update – First seven weeks of FY25, Department store comparable sales are up 0.2% year-on-year

Earnings Call Highlights

The below topics have been answered by Executive Chair Olivia Wirth and CFO Matt Jackson.

FY24 performance: "Operating gross profit margin being adversely impacted in FY24 by the shift in more concessions in our sales mix. This is a challenge we can address by growing our private label and exclusive brand portfolio."

Margin outlook: "It also requires a more disciplined approach to pricing architecture and ensuring we optimise the return on investment of our promotional spend."

Online sales performance: "Our online business exceeds $700 million in sales annually ... Our data shows that customers who choose to spend across stores and online spend 2.4 times more than on an in-store basis only."

Cost management and inflation trends: "We'll continue to introduce more disciplined cost and capital management. We believe there is an immediate opportunity, particularly as it relates to promotional spend, shrinkage and tighter control of inventory."

Consumer spending patterns: "We are seeing a rebalance away from a predominantly price and promotional seeking customer to a younger, more fashion and experience-conscious customer segment."

Sales performance: "We think this was a resilient sales performance given the continuation of similar macro conditions to the first half ... Comparable sales within our department store business increased at a higher rate in the second half."

Loyalty program: "We see real opportunity to unlock the full potential of Myer one by refreshing the core program, commercialising opportunities, building the partnerships ecosystem, and elevating it into a digital product with constant relevance for engagement."

Premier Investments merger: "Our discussions with Premier Investments about a potential combination with their apparel brands business, which we announced in June, are progressing, and due diligence is underway ... This would add brands such as Just Jeans, Portmans, Jacqui, and Dotti to our portfolio."

Analyst Q&A Highlights

Current state of play for retail sector: "We don't see any significant changes in the macroeconomic outlook ... there is some variance in performance across different verticals. Beauty, for example, continues to perform despite the tough trading conditions ... we do have flexibility to make sure that we have the right offering as we lean into Q2 ... But we're very cautious and trading remains tough."

Why take on another 600 stores from Premier if Myer struggles with specialty store brands: "... I would dismiss the premise of your question ... FY24 was a tough year for sass & bide, Marcs, and David Lawrence. But prior to that...these businesses actually did provide economic contribution to Myer ... the combination of our assets such as Myer one, e-commerce capability, and data smarts, we believe we can drive these businesses in a different way."

CBD store performance: " ... our CBD stores, while they had recovered strongly, they haven't recovered to pre-COVID ... there are challenges with getting people back."

Myer's 'right to win' in categories like home: "...our home business performs quite well. It's a key pillar for us as a department store...there's an opportunity to cross-sell."

How customers respond outside of sales periods: "We have indicated that trading remains tough ... sales activity or promotional activity is an important tool for any retailer ...the consumer is looking for value...we are getting ready for peak trading periods like Q2."

This article was generated with the support of AI and reviewed by an editor.