“The fact is that CBD stores were walloped pre-COVID, during COVID and even post the lockdowns as well. All the big cities are in the same boat around the world, doesn’t matter if you’re in Melbourne or Madrid.”
The chief executive’s comments come as the struggling department store chain swung to a $172 million loss for the past financial year after the retailer was forced to write down the value of its brand names after being battered by the COVID-19 crisis.
Myer told investors on Thursday its statutory net loss after tax for the year ending July 25 was $172.4 million, an 800 per cent decline on the net profit of $24.5 million in posted in 2019.
This loss was primarily driven by $159 million in significant items, including a $95.9 million write-down to the value of the company’s brand names. Excluding these significant items, Myer reported a net loss after tax of $11.3 million. Revenue for the retailer also fell, down 15.8 per cent to $2.52 billion.
Shares plunged 15 per cent to 22 cents following the announcement as investors reacted to the worse-than-expected numbers. Myer did not pay a dividend.
Myer, like many retailers, has had a difficult year due to COVID-19, with the chain forced to shut its stores in late March due to government-enforced lockdown laws. Eleven Victorian stores were then shut again in August thanks to the state’s stage four restrictions.
Mr King is now pinning the company’s hopes on its online division, which grew 61.1 per cent for the year and now accounts for 17 per cent of total sales, or around $422 million.
Myer wants this channel to be a billion-dollar business in the coming years and will increase its investment in it to achieve that goal. The company recently inked deals with Amazon and Australia Post which will improve its delivery and click and collect offerings.
The department store received $93 million in JobKeeper subsidies, the highest amongst its retail peers, for its 10,000 staff which were stood down during store closures. Over half this amount was a direct fillip for the retailer and helped it turn its $38 million in debt to a net cash position of $7.9 million.
However, Myer will not be eligible for the government’s revised JobKeeper package due to its recent trading performance. Chief financial officer Nigel Chadwick said the business had been taking a conservative approach to costs to prepare for the subsidy loss, but warned cuts may have to be made to the department store’s workforce.
“We’re certainly looking at how we manage the stores based on our lower foot traffic. We’ll continue to rationalise depending on peak trading hours versus non-peak hours,” he said.
Mr King said Victoria’s lockdown was “prison-style” and expressed his frustration at not having a staged reopening of retail stores in the state.
The chief executive is also concerned retailers could see a “mad rush” back into stores in October as shoppers prepare for Christmas, which the retailer is expecting to be very different this year.
“We have to manage things differently, so we won’t be doing the windows in the way that we do them normally, because of social distancing,” he said.
“Santa will have to be a socially-distanced Santa this year, and probably a virtual Santa in Victoria.”
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.