ASX & MEDIA RELEASE

For immediate release

Thursday 19 March 2015

Myer First Half 2015 Results and Full Year 2015 Guidance
Myer Holdings Limited (MYR) today announced results for the 26 weeks to 24 January 2015.
First Half Overview

1H FY2015 total sales up 1.5% to $1,763 million, up 0.9% on a comparable store sales basis
Q2 total sales up 2.5% to $1,072 million, up 1.0% on a comparable store sales basis
January total sales up 3.9%
Continued strong growth in online sales
Operating gross profit1 up 0.9% to $714.9 million
Operating gross profit margin down 24 basis points (bps) to 40.54%
Cash cost of doing business (CCODB)1 up 6.2% to $569.6 million
o Underlying costs up 2.4%
o $20 million investment in the business
Earnings before interest, tax, depreciation, amortisation (EBITDA) down 15.6% to $145.3 million
Earnings before interest and tax (EBIT) down 20.8% to $100.2 million
Net profit after tax (NPAT) down 23.1% to $62.2 million
Interim dividend of 7 cents per share, fully franked, to be paid on 7 May 2015 (Record Date is
30 March 2015)

FY2015 Outlook

Recent sales have been ahead of last year but below expectations and the Company now anticipates
operating gross profit margin pressure to continue during the second half
We anticipate total costs to grow by approximately $15 million in the second half compared to 2H FY2014
One-off costs in 2H relating to the strategic review are expected to be approximately $7 million
The Company now expects FY2015 NPAT to be between $75-80 million (excluding one-off costs)

Overview of trading and performance

Trading conditions during the second quarter were challenging, only improving in late December. The Stocktake sale
was ahead of last year on a total and comparable store sales basis, however this was not sufficient to make up for the
shortfall in sales earlier in the half. The highly competitive environment, together with the overall effect of a weaker
Australian dollar, contributed to a deterioration in the gross profit margin of 24 basis points.
Preparation and execution ahead of the important Christmas trading period was strong, with two new stores trading,
four major refurbishments completed, and the opening of additional space in Emporium adjoining the Melbourne
flagship store. The launch of the unique Christmas Giftorium concept across all stores reflected a focus on
innovation and was successful in delivering an enhanced customer experience with positive feedback received from
customers and suppliers.
A number of new brands were rolled out during the half including: White Suede, By Johnny and Alex Perry in
Womenswear; M.J. Bale, Herringbone and Aquila in Menswear; and Calvin Klein Performance in Womens Active.
_________________________________________________________________________________________________________
Myer Holdings Ltd ABN 14 119 085 602

Myer is pleased to have welcomed a number of new Australian and international brands since the start of the second
half including: Maison Scotch, Skin and Threads, and Asilio in Womenswear; Jo Malone in Cosmetics; Scotch & Soda,
and Pierre Balmain in Menswear; and Calvin Klein in handbags.
A proposed store at Greenhills in New South Wales will no longer proceed.
A review of Myers strategy continued during the half and was accelerated towards the end of the period. This work
is ongoing with a view to positioning the business for a sustainable and profitable future.
1H FY2015 FINANCIAL PERFORMANCE
Sales
Total sales grew by 1.5 percent for the half to $1,763 million (up 0.9 percent on a comparable store sales basis).
Q2 sales were up 2.5 percent to $1,072 million (up 1.0 percent on a comparable store sales basis).
Cosmetics was once again the top performing category during the half, benefiting from growth across a number of
brands and an ongoing commitment to high quality service and theatre in stores. Other strong performing categories
included Menswear, Childrenswear, Toys, and Entertainment. Offsetting this was the continued challenges in the
Womenswear category.
Online sales continued to grow driven by improvements in the presentation, functionality and stability of the
website, ongoing improvements to fulfilment processes, and increased customer engagement.
Margins and costs
Operating gross profit margin declined by 24 basis points to 40.54 percent (1H FY2014: 40.78 percent). Operating
gross profit margin fell as a result of pricing pressure in a highly competitive environment, the depreciation of the
Australian dollar, as well as an increased mix of lower margin categories.
Cash CODB increased by 6.2 percent to $570 million during the half. Myer previously flagged that it would make
investments in the range of $35-50 million during FY2015. As sales tracked below expectations, a prudent approach
to this investment was taken. Approximately $20 million was spent during the first half, primarily on revenue
generating initiatives including Myers brand relaunch, refurbished and new stores, IT infrastructure, and costs
relating to the merchandise and omni-channel strategies.
Depreciation, net finance costs and tax
Depreciation fell marginally to $45 million (1H FY2014: $46 million). The net interest expense increased to
$11.4 million from $11.1 million. Tax expense of $27 million represents an effective tax rate of 30 percent
(1H FY2014: 30 percent).
Cash generation and working capital
Operating cashflow fell 25.3 percent to $194 million (1H FY2014: $259 million) as a result of reduced earnings and
investment to support refurbishments and merchandise initiatives.
Aged inventory fell 4.7 percent during the period, while overall inventory increased by 6.9 percent to $375 million
(1H FY2014: $351 million) driven by additional merchandise for new and refurbished stores. Stock turns were flat at
3.5 times. Creditor days improved to 73 days (1H FY2014: 70 days), partly due to timing.
Capital expenditure
Capital expenditure (gross) increased by 35.8 percent to $43 million for the period (1H FY2014: $32 million) reflecting
investment in new stores, store refurbishments, ongoing investment in our omni-channel strategy, and investment in
the launch of Giftorium and other merchandise initiatives.

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Page 2 of 6
Myer Holdings Ltd ABN 14 119 085 602

Balance sheet and dividend

Net debt increased by 13.7 percent to $261 million. Cash generation remains strong and the Company remains
confident in its balance sheet position. The Board has determined an interim dividend of 7 cents per share
(1H FY2014: 9 cents per share).
OUTLOOK
While ahead of last year, sales in February were below expectations and this trend has continued into March. The
February operating gross profit margin result and early read on March sales has led to the Company revising
expectations for the year.
During the second half, sales will be supported by two new stores and four completed refurbishments, as well as
continued growth in online sales. However, the heightened competitive environment experienced in the first seven
weeks in the half is expected to continue. A number of new sales driving initiatives will be rolled out across stores
and online, particularly in the fourth quarter.
Overall costs will be carefully managed with a focus on investment in customer facing and revenue generating
initiatives.
The Companys expectations for the financial year 2015 are as follows:

Growth in second half total sales of 3-4 percent compared to 2H FY2014

Decrease in second half operating gross profit margin of 15-30 basis points compared to 2H FY2014
Increase in second half total costs of approximately $15 million (excluding one-off costs of $7 million relating to
the strategic review) compared to 2H FY2014
Second half FY2015 NPAT is expected to be between $13-18 million (2H FY2014 $17.5 million)
Full year 2015 NPAT is expected to be between $75-80 million, excluding one-off costs (FY2014 $98.5 million)
Full year 2015 capital expenditure of $70-75 million ($52-57 million net of landlord contributions)
No change to the Boards target dividend payout ratio of between 70-80 percent of NPAT

This guidance assumes no further weakening of the retail trading environment and does not include any benefits or
costs associated with the implementation of the strategic review.
STRATEGIC REVIEW
Myer has been undertaking a thorough review of its strategy. This has continued under the leadership of new Chief
Executive Officer, Richard Umbers.
Myer Chief Executive Officer, and Managing Director, Richard Umbers said We acknowledge that in recent years,
cost growth has outpaced sales growth, and profits have declined. At a macro level, the challenges are well known,
particularly the globalisation of retail which has brought new competitors to our shores. Digitisation has both
empowered the consumer and created new channels to market. Customers have changed the way they shop and
their expectations of retailers have changed significantly.
Some elements of the existing strategy represent solid retail fundamentals. However, overall it did not deliver a
business model able to respond to this new retail environment and we have lost relevance with some customers.
There is strong evidence that department stores can transform and be inspirational to customers. Our international
peers have responded to disruption by leading in omni-channel, by reinventing the in-store experience, overhauling
the range, and by differentiating through innovation.
Our new strategy to bring the love of shopping to life will be guided by a clear vision and a plan to win back market
share, to respond faster to change and deliver a sustainable recovery in earnings.

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Page 3 of 6
Myer Holdings Ltd ABN 14 119 085 602

An extensive customer research project using internal and external data sources has delivered a detailed analysis of
the current and future Myer customer, and the merchandise and services they want to enrich their lifestyle, he said.
The enablers of the new strategy include:

Customer driven decision making all decisions will be guided using a targeted approach to the current and
future customers
Merchandise assortment and in-store services transform ranging, strong brand emphasis, space allocation
and in-store experience
Data and digital accelerate omni-channel and leverage the MYER one program
Asset and cost productivity maximise productivity from all assets to increase returns

All our efforts will be underpinned by strong execution and organisational capability, Mr Umbers said.
Creation of shareholder value is our key priority and rigorous return on investment hurdles will be enforced. Over
time we will create an operational model that is better leveraged to reward shareholders for growth.
The management team has a valuable mix of new and established leadership that is energised and determined to
repostition the new Myer as a modern, inspiring department store.
We are confident that there is a significant opportunity available to the business in a changing retail landscape. We
look forward to sharing more details on our strategic review later in the year, he said.
-ends-

For further information please contact:

Investors:
Davina Gunn, Investor Relations Manager, +61 (0)400 896 809
Olivia Reith, Investor Relations Manager, +61 (0)438 101 789
Media:
Jo Lynch, General Manager Corporate Affairs and Media, + 61 (3) 8667 7571, or +61 (0)438 101 793

Myer shares are traded on the Australian Securities Exchange (MYR). Myer has a Sponsored Level I American Depository Receipt program which
trades in the United States on OTC Markets (MYRSY).
All numbers are unaudited. The financial information includes non-IFRS information which has not been specifically audited in accordance with
Australian Accounting Standards but has been extracted from the Half-Year Financial Report (Appendix 4D). This release may contain forwardlooking statements. Forward-looking statements can generally be identified by the use of words such as may, will, expect, intend,
plan, estimate, anticipate, believe, continue, objectives, outlook, guidance and similar expressions. Indications of plans,
strategies and objectives of management, sales and financial performance are also forward-looking statements. Forward-looking statements
are not guarantees of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are outside
the control of Myer. Actual results, performance or achievements may vary materially from any forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking statements, which are current only as at the date of this release. Subject to law, Myer
assumes no obligation to update such information.

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Page 4 of 6
Myer Holdings Ltd ABN 14 119 085 602

Table 1: Profit & Loss Statement for the 26 weeks to 24 January 2015

1H 2015

1H 2014

$m

$m

1,763.4

1,737.1

+1.5%

Concessions

265.1

264.3

+0.3%

Myer Exclusive Brands

364.9

350.8

+4.0%

1,133.4

1,122.0

+1.0%

714.9

708.4

+0.9%

Operating Gross Profit margin

40.54%

40.78%

(24bps)

Cash Cost of Doing Business1

(569.6)

(536.2)

+6.2%

Cash Cost of Doing Business/Sales

32.30%

30.87%

+143bps

EBITDA

145.3

172.2

(15.6%)

EBITDA margin

8.24%

9.91%

(167bps)

Depreciation and amortisation

(45.1)

(45.6)

(1.1%)

EBIT

100.2

126.6

(20.8%)

EBIT margin

5.68%

7.29%

(161bps)

Interest

(11.4)

(11.1)

+2.7%

88.8

115.5

(23.1%)

(26.6)

(34.7)

(23.1%)

62.2

80.8

(23.1%)

Total Sales Value

Other

Operating Gross Profit1

Net Profit Before Tax

Tax
Net Profit After Tax (NPAT)

Change vs. LY

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Myer Holdings Ltd ABN 14 119 085 602

Table 2: Balance Sheet as at 24 January 2015

January 2015

January 2014

$m

$m

Inventory

375

351

Other Assets

64

57

Less Creditors

(474)

(466)

Less Other Liabilities

(202)

(199)

Net Trading Investment

(237)

(257)

Property

25

25

Fixed Assets

476

471

Tangible Funds Employed

264

239

Intangibles

933

929

1,197

1,168

Debt

307

306

Less Cash

(46)

(76)

Net Debt

261

230

Equity

936

938

1,197

1,168

Total Funds Employed

Total Investment

Table 3: Other Statistics and Financial Ratios

1H 2015

1H 2014

$43m

$32m

11.31%

17.20%

21.84%

19.69%

Net Debt/EBITDA2

1.16x

0.80x

Fixed Charges Cover2,3

1.84x

2.16x

3.5

3.5

73 days

70 days

1H 2015

1H 2014

585.7 million

584.8 million

10.6 cents

13.8 cents

7 cents

9 cents

Capital Expenditure (gross)

Return on Total Funds Employed
Gearing

Stock turn (times)

Creditor Days

Table 4: Shares and Dividends

Shares on Issue4
Basic EPS
Dividend per share

1 To better reflect the nature of certain items of income and expense the income statement includes a reclassification of those items from
Operating Gross Profit to Cash Cost of Doing Business. This is in line with the reclassification disclosed in the FY2014 full year results. Please
refer to slide 24 in the presentation for details.
2 Calculated on a rolling 12 months basis
3 Calculated as EBITDAR / (net interest expense + fixed rental expense)
4 Weighted average number of shares

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Myer Holdings Ltd ABN 14 119 085 602

MYER Half Year Results 2015

2015 HALF
Y E A R R E S U LT S
Thursday 19 March 2015

RICHARD UMBERS
CEO and Managing Director

MARK ASHBY
Chief Financial Officer

2015 HALF
Y E A R R E S U LT S
Welcome
Financial update
Outlook
Looking forward

RICHARD UMBERS
CEO and Managing Director

19 March 2015

MYER Half Year Results 2015

2015 HALF
Y E A R R E S U LT S
Welcome

Financial update
Outlook
Looking forward

MARK ASHBY
Chief Financial Officer

1H 2015 FINANCIAL UPDATE

1H FY2015 FINANCIAL OVERVIEW

Sales growth disappointing given completed initiatives
1H sales up 1.5% to $1,763 million (comparable store sales up 0.9%)
Q2 sales up 2.5% (comparable store sales up 1.0%), January sales up 3.9%

Operating gross profit up 0.9% to $715 million

Operating gross profit margin down 24 bps to 40.54% reflecting:
Increased pricing pressure in a highly competitive retail environment,
depreciation of AUD, mix impact from lower margin categories

Cash CODB up 6.2% to $570 million as flagged in September 2014

Underlying cost inflation, investment in key initiatives

NPAT down 23.1% to $62 million

Interim dividend of 7 cents, fully franked

19 March 2015

MYER Half Year Results 2015

1H FY2015 OPERATIONAL HIGHLIGHTS

Strong execution of strategic initiatives pre Christmas
Two store openings, four major refurbishments launched
Giftorium Christmas concept
Brand relaunch, find wonderful

Strengthened omni-channel offering

Key metrics improved, strong growth in online sales
Improved presentation, functionality and stability of website
Strong in-store sales via iPads, increasing take up of Click & Collect

Continued focus on improving customer service

Strengthened frontline management in store

New Australian & international brands secured

1H 2015 FINANCIAL UPDATE

1H FY2015 SALES PERFORMANCE

Sales drivers:
Growth across National brands, MEBs, Concessions, sass & bide

SALES GROWTH ($) AND MIX (%)

Cosmetics, Menswear, Childrenswear, Toys, Entertainment

+$0.8m

New and refurbished stores, Giftorium, continued online sales growth

+$11.4m
15.0%

Strong Stocktake sale

Comparable store sales growth in 10 of the last 11 quarters

+$14.1m
20.7%
64.3%

Offset by:
Challenging trading conditions, particularly during first half of Q2
including early December
Continued challenges in Womenswear

MYER EXCLUSIVE BRANDS (MEBs)

Disruption from Macquarie and Miranda refurbishments

CONCESSIONS

Pacific Fair centre refurbishment

NATIONAL BRANDS

1H 2015 FINANCIAL UPDATE

19 March 2015

MYER Half Year Results 2015

OPERATING GROSS PROFIT MARGIN*

Margin-enhancing drivers

% Operating gross profit margin

42.0

Positive mix impact from MEBs sales growth

41.5

Offsetting factors

41.08

40.89

41.0

40.78
40.54

40.5

Pricing pressure across merchandise portfolio

40.0

Highly competitive environment

39.5

Depreciation of AUD

39.0

Mix impact from lower margin categories

38.5

39.18

38.0
1H11

1H12

1H13

1H14

1H15

*Refer slide 20 for OGP to cash CODB reclassification

OPERATING GROSS PROFIT MARGIN RESULT REFLECTS COMPETITIVE TRADING ENVIRONMENT

1H 2015 FINANCIAL UPDATE

CASH COST OF DOING BUSINESS*

Previously flagged cash CODB increases:
$20m additional investment in 1H reflecting:
Brand relaunch
New stores, refurbished stores
IT infrastructure
Omni-channel initiatives
Merchandise initiatives

CODB $m

CODB/Sales %

$m

650
600

30.16

30.37

30.87

32.30

35
30

550

25

500

20

450
400

514

526

536

570

15
10

350

300
*Refer slide 20 for OGP to cash CODB reclassification

250
1H12

1H13

1H14

1H15

1H 2015 FINANCIAL UPDATE

19 March 2015

MYER Half Year Results 2015

WORKING CAPITAL
Increased stock levels reflected:
Increase in stock held for new and refurbished stores

Aged inventory fell 4.7%

Inventory turns flat at 3.5 times
Creditor days improved to 73 days (1H FY2014: 70 days), partly
due to timing

INVENTORY REMAINS WELL MANAGED

Image: Aura by Tracy Ellis

1H 2015 FINANCIAL UPDATE

1H 2015 FINANCIAL UPDATE

10

KEY CREDIT METRICS

Key credit metrics

24 January 2015

Bank covenants

Net debt / EBITDA 1

1.16x

<2.5x

Fixed charge cover 1, 2

1.84x

>1.65x

$936m

>$500m

Shareholders equity
1 Calculated
2 Fixed

on a 12 month rolling basis

charge cover is calculated as EBITDAR / (net interest expense + fixed rental expense)

SIGNIFICANT HEADROOM IN COVENANTS

19 March 2015

MYER Half Year Results 2015

2015 HALF
Y E A R R E S U LT S
Welcome
Financial update

Outlook
Looking forward

MARK ASHBY
Chief Financial Officer

11

FY2015 OUTLOOK
February and March sales below expectations
February operating gross profit margin result and March sales trend
has led the Company to revise financial year 2015 expectations:
Growth in 2H total sales of 3-4% vs. 2H FY2014
Decrease in 2H operating gross profit margin of 15-30bps vs. 2H FY2014
Increase in 2H total costs of approximately $15 million (excluding one-off
costs of $7 million relating to strategic review) vs. 2H FY2014
2H FY2015 NPAT of $13-18 million (2H FY2014 $17.5 million)
FY2015 NPAT of $75-80 million, excluding one-off costs
Capital expenditure $70-75 million (gross), $52-57 million (net)
No change to Board target dividend payout ratio of 7080%

Assuming no deterioration in trading conditions, and excluding

benefits or costs associated with implementation of strategic
review initiatives
OUTLOOK

19 March 2015

12

MYER Half Year Results 2015

2015 HALF
Y E A R R E S U LT S
Welcome
Financial update
Outlook

Looking forward

RICHARD UMBERS
CEO and Managing Director

13

OUR RECENT JOURNEY REPOSITIONING THE BUSINESS

sass & bide
acquisition completed

Joondalup opened

New customer
communications creative

Brand relaunch

Aug 2014
Sept 2013

Oct 2014

Oct 2014

Strengthened
leadership team

New CEO

Jan 2015

Nov 2014
Nov 2014

Jan 2015

Mar 2015

Giftorium
Mt Gravatt opened

Hurstville closure
LOOKING FORWARD 14

19 March 2015

MYER Half Year Results 2015

REINVIGORATING OUR OFFER

Strategic review underway
To respond to changing customer behaviour and retail landscape

Target outcome is an operational model better leveraged to

reward shareholders by
Delivering a sustainable earnings growth
Yielding strong returns above investment hurdles

Positioning Myer for a sustainable, profitable future

CREATING WONDERFUL SHOPPING EXPERIENCES

Image: Aura by Tracy Ellis

LOOKING FORWARD 15

EXTENSIVE CUSTOMER ANALYSIS

Well advanced on extensive research to better understand
our current and future customers
~50,000 shoppers surveyed (internal and external sources),
multiple segments and demographics
All store catchments analysed

Emerging insights that will help us

Become more relevant for our customers
Respond faster, benefit from globalisation and digitisation forces
Win back market share

DEEP UNDERSTANDING OF OUR CUSTOMER INFORMS NEW THINKING

LOOKING FORWARD 16

19 March 2015

MYER Half Year Results 2015

TRANSFORMING THE BUSINESS

Immediate focus on reversing the trend of 1H and recalibrating
the business for growth
Enablers
Customer driven decision making
Merchandise assortment and in-store services
Data and digital
Asset and cost productivity

Underpinned by strong execution and organisational capability

Shareholder value creation is key, rigorous return on investment
hurdles

BRINGING THE LOVE OF SHOPPING TO LIFE

LOOKING FORWARD 17

2015 HALF
Y E A R R E S U LT S

Thursday 19 March 2015

RICHARD UMBERS
CEO and Managing Director

MARK ASHBY
Chief Financial Officer

18

19 March 2015

MYER Half Year Results 2015

HISTORICAL SALES INCLUDING CONCESSIONS

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

Total sales
$m

652.5

759.9

691.1

1,046.0

646.5

759.4

691.6

1,071.8

Total Sales
growth

+0.5%

-0.8%

+0.4%

+0.2%

-0.9%

-0.1%

+0.1%

+2.5%

LFL sales
growth*

+0.4%

-1.6%

+0.4%

+1.7%

+0.2%

+2.1%

+0.7%

+1.0%

Notes:
* In the like-for-like methodology (comparable store sales) sales for refurbished stores are excluded for the period of
refurbishment only. Also excluded are new and closed stores.

APPENDIX

19

OPERATING GROSS PROFIT CASH CODB RECLASSIFICATION

To better reflect the nature of certain items of income and expense in the profit and loss statement, we have reclassified certain items from Operating Gross Profit (OGP) to
cash Cost of Doing Business (cash CODB). This adjustment has resulted in the reclassification of certain items previously included in the Other Income line into Other
Operating Revenue or Cost of Goods Sold (where items previously classified as Other Income relate to trading activities). The remaining items previously included within
Other Income as part of OGP have been reclassified to cash CODB (where they relate to cost recovery, rebates associated with overhead costs, or non-trading income
items).

$m

1H15

1H14

1H13

1H12

1H11

Operating Gross Profit previous classification

712.1

714.0

698.3

702.6

% margin

41.00%

41.21%

40.98%

40.54%

Adjustment

(3.7)

(2.4)

(1.5)

(23.5)

Operating Gross Profit revised classification

% margin
$m

714.9

708.4

711.6

696.8

679.1

40.54%

40.78%

41.08%

40.89%

39.18%

1H15

1H14

1H13

1H12

1H11

Cash Cost of Doing Business previous classification

539.9

528.6

515.4

499.4

% margin

31.08%

30.51%

30.25%

28.82%

Adjustment

(3.7)

(2.4)

(1.5)

(23.5)

Cash Cost of Doing Business revised classification

% margin

569.6

536.2

526.2

513.9

475.9

32.30%

30.87%

30.37%

30.16%

27.46%

APPENDIX
APPENDIX
/

19 March 2015

20

10

MYER Half Year Results 2015

DISCLAIMER
All numbers are unaudited. The financial information includes non-IFRS information which has not been specifically audited in
accordance with Australian Accounting Standards but has been extracted from the Half-Year Financial Report (Appendix 4D).
This release may contain forward-looking statements. Forward-looking statements can generally be identified by the use of
words such as may, will, expect, intend, plan, estimate, anticipate, believe, continue, objectives, outlook,
guidance and similar expressions. Indications of plans, strategies and objectives of management, sales and financial
performance are also forward-looking statements. Forward-looking statements are not guarantees of future performance, and
involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Myer. Actual results,
performance or achievements may vary materially from any forward-looking statements. Readers are cautioned not to place
undue reliance on forward-looking statements, which are current only as at the date of this release. Subject to law, Myer
assumes no obligation to update such information.

DISCLAIMER
APPENDIX
/

19 March 2015

21

11