Myer’s Latest Strategy: Boosting Profits Through In-House Labels
Myer has committed to focusing on and investing in underperforming private brands to address challenges in the current macroeconomic environment, which saw profits decrease by over a quarter.
According to the results released on Sep. 20, the 124-year-old retailer saw a 26% drop in total profit after tax to $52.6 million (US$35.8 million) from $71.1 million (US$48.4 million) the previous year.
More than half of this loss was attributed to the underperformance of Myer-owned brands such as sass & bide, Marcs, and David Lawrence, which were initially planned for sale but are now being targeted for improvement.
Although comparable sales growth in 2022/23 increased by 0.4%, total sales decreased by 2.9% due to the closure of department stores in Victoria and Queensland.
Operating gross profit declined by 2.5%, while the cost of doing business rose by 1.3% to $834 million (US$567.8 million) and net capital expenditure amounted to $69.4 million (US$47.3 million).
Executive chair Olivia Wirth noted that the results reflect the challenging Australian business landscape.
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Despite the challenging conditions, the efforts made by the Myer team in recent years have helped stabilize the business and lay the groundwork for future growth, according to the former Qantas Loyalty CEO.
Wirth emphasized that Myer is dedicated to improving performance and delivering returns to shareholders.
She stated, “We have initiated a thorough strategic review to enhance Myer’s profitability and achieve sustainable earnings growth. Our goal is to identify opportunities to significantly improve Myer’s market position and create strategic and financial benefits.”
Myer’s exclusive brands sass & bide, Marcs, and David Lawrence were initially slated for sale but are now being retained as part of a focus on in-house brands in the revamped strategy.
In June, Myer announced its intentions to acquire clothing brands Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti from Premier Investments’ Apparel Brands.
If the acquisition is successful, Myer would gain full ownership of these brands in exchange for new shares provided to Premier shareholders.
These acquisitions could significantly boost Myer’s earnings, with Apparel Brands expected to generate $130 million (US$88.5 million) in profit in the next fiscal year.
Wirth stated, “We are in discussions with Premier Investments and conducting due diligence to assess the benefits for Myer shareholders of a potential merger with Apparel Brands. There are opportunities to leverage potential cost and revenue synergies in areas such as sourcing, supply, property, and brand management.”
As of Sep. 20, Myer’s shares had dropped by four percent to 85 cents, but year-to-date, the share value had increased by 40% from 60 cents per share in January.
