Myer Achieves Record Sales in 2023

Myer Holdings (ASX: MYR), the fashion retailer, reported its highest total sales since 2005, reaching AU$3.36 billion. This increase can be attributed to the successful combination of a robust online business, accounting for 20.5% of total sales (A$691 million), and productivity enhancements in physical stores, which have grown by 10% since pre-COVID (FY19). In the second half of the year, total sales growth stabilized at 0.4%, while Group Online sales saw a 3.2% year-on-year growth.

Source: Kapitales Research

CBD Stores Lead the Way

CBD stores have emerged as the strongest channel, with a remarkable 30.0% increase in sales during FY23. Even when excluding lockdown periods from the prior year, these stores still managed an impressive 14.4% growth on a comparable sales basis.

Strengthened Loyalty and Partnerships

MYER one, Myer's loyalty program, remains a significant growth driver, with 720,000 new members, a 21.4% increase. The tag rate across all transactions reached a record high of 74.6%. Furthermore, partnerships and the Pay with Points program have expanded Myer's customer base, revenue streams, and value offerings for customers.

Future Growth and Strategy

Despite economic uncertainty, Myer is well-positioned to create future value through its loyalty and partnership ecosystem. It boasts a robust inventory position and brand relationships aimed at injecting "newness" during key sales periods. The rollout of the Country Road Group of brands presents a substantial sales opportunity. Meanwhile, NDC (National Distribution Centre) and other initiatives aim to enhance efficiency and the multi-channel customer experience. In-store technology investments and productivity activities mitigate rising costs.

CEO's Perspective and Outlook

Myer's CEO, John King, emphasized the strength of their multi-channel approach in competing against pureplay retailers. The synergy between digital and physical environments has proven successful, with CBD locations and online sales showing promising results. The Customer First Plan positions Myer to leverage its unique strengths, such as merchandise offers, multichannel capabilities, and the leading loyalty program, ensuring customer value and profitability protection. King expressed optimism about the upcoming initiatives set to realize value in FY24.

Trading Update and Management Succession

In the first six weeks of FY24, department store comparable sales decreased by 1.9% compared to the previous year. Myer remains cautious about the macroeconomic environment but is optimistic about its strong results. Meanwhile, Chief Financial Officer Nigel Chadwick will retire in early 2024, with Deputy CFO Matt Jackman taking over from February 1, 2024.

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