Myer Holdings Limited · ASX:MYR
Myer — H1 2020 Earnings Presentation
30 slides from Myer's earnings presentation, Mar 5, 2020
Slide 1: Half Year 2020 Results: Solid result despite macro headwinds
5 March 2020 For personal use only HALF YEAR 2020 RESULTS SOLID RESULT DESPITE M ACRO HE ADWINDS EBITDA1 $113.1 million (-0.4%) Net Profit After Tax1 $41.5 million (+0.4%) Net cash improved $65 million to $103 million 1H20 RESULTS (pre-AASB 16) for the 26 weeks to 25 January 2020, compared to 1H19:
Slide 2: CEO commentary on half-year result
Myer Chief Executive Officer and Managing Director, John King, said: “This result demonstrates our continued focus on profitable sales, a disciplined management of costs and cash and strengthening the balance sheet. For personal use only “Achieving growth in EBIT despite a deterioration in the opera
Slide 3: Outlook, footnotes and investor briefing details
progress I am in no doubt that we still have considerable work to do. For personal use only “The supply chain impact of Coronavirus is currently being managed by our teams in Hong Kong and Shanghai. The team are focused on mitigating the impact of delays to the planned delivery of merchandise. “Myer
Slide 4: Myer Half Year 2020 Results
MARCH 5 2020 For personal use only MYER HALF YEAR 2020 RESULTS TO 25 JANUARY 2020 JOHN KING NIGEL CHADWICK CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
Slide 5: Important Information
Important Information For personal use only The information in this document is general only and does not purport to be complete. It should be read in conjunction with Myer’s other periodic and continuous disclosure announcements. Investors or potential investors should not rely on the information p
Slide 6: Introduction, 1H20 Results, Customer First Plan, Conclusion
For personal use only Introduction 1H20 Results Customer First Plan Conclusion Tokito
Slide 7: 1H20 Results Summary (Pre-AASB 16), compared to 1H19
1H20 Results Summary (Pre-AASB 16), compared to 1H19 For personal use only • Total sales down 3.8% to $1,607.9 million • Comparable store sales, excluding sales in Apple and Country Road Group (CRG), up 0.4% Trading • Operating Gross Profit (OGP) down 2.3% to $629.3 million, up 62bps to 39.14% • Cos
Slide 8: Solid result considering macro headwinds in key trade periods
Solid result considering macro headwinds in key trade periods For personal use only • Customer satisfaction metrics improved • Continued strong growth in online sales; online OGP margin grew faster than sales • The focus on the Customer First Plan has delivered gross profit growth in the following c
Slide 9: Introduction, 1H20 Results, Customer First Plan, Conclusion
For personal use only Introduction 1H20 Results Customer First Plan Conclusion Champion
Slide 10: Income statement (Pre-AASB 16)
Income statement (Pre-AASB 16) For personal use only $ MILLIONS 1H20 1H19 CHANGE Total Sales 1,607.9 1,671.4 (3.8%) • Sales decrease driven by exit of Apple and CRG ($65m) and the subdued operating environment Operating Gross Profit 629.3 643.8 (2.3%) • Comparable sales, excluding Apple and CRG, up
Slide 11: 1H20 Results Summary
1H20 Results Summary For personal use only 1H20 1H20 1H19 CHANGE $ MILLIONS (Statutory) (pre-aasb 16) (pre-aasb 16) (pre-aasb 16) Total Sales* 1,607.9 1,607.9 1,671.4 (3.8%) EBITDA** 218.4 113.1 113.6 (0.4%) EBIT ** 106.2 64.5 63.8 1.2% NPAT ** 39.6 41.5 41.3 0.4% Implementation Costs and Individual
Slide 12: 1H20 trade was challenging as expected
1H20 trade was challenging as expected For personal use only YOY MOVEMENT 1H20 FY19 1H19 Comparable store sales (3.6%) (2.9%) (2.3%) • Key trading events generally well executed; trade outside of key events subdued, particularly in critical Q2 Comparable sales (ex. Apple) (2.0%) (1.3%) n/a • Decline
Slide 13: Operating gross profit margin improvement (Pre-AASB 16)
Operating gross profit margin improvement (Pre-AASB 16) For personal use only Operating Gross Profit ($m) • The 62bps increase in OGP margin did not offset the sales 644 volume decline (26) 629 • The following Customer First Plan initiatives delivered rate 4 improvements during the period: 2 5 - Exi
Slide 14: Cost reductions achieved (Pre-AASB 16)
Cost reductions achieved (Pre-AASB 16) For personal use only Cost of Doing Business ($m) Myer Group Cost Structure ($m) (5) 530 516 530 (16) (5) Operating Wages 516 (1) Operating Other Costs Support Office CODB 1H19 Inflation Investment in Space Store Support Office Procurement CODB 1H20 1H19 1H20 O
Slide 15: Operating Cash Flow (Pre-AASB 16)
Operating Cash Flow (Pre-AASB 16) For personal use only $ MILLIONS 1H20 1H19 EBITDA* 113.1 113.6 • Operating cash flow (before interest & tax) decreased by $8 million to $179 million; conversion up Less Implementation Costs and ISIs (19.0) (4.1) • The seasonal working capital release in the current
Slide 16: Balance Sheet
Balance Sheet For personal use only $ MILLIONS 1H20 aasb 16 1H20 FY19 1H19 (statutory) impact (pre-aasb16) (pre-aasb16) (pre-aasb16) Inventory 340.7 - 340.7 346.9 360.1 • Inventory continues to be well managed, down 5.4% Creditors (455.1) 0.5 (454.6) (372.6) (466.1) • Net cash at end of period of $1
Slide 17: Significant headroom exists in all covenants
Significant headroom exists in all covenants* For personal use only $ MILLIONS 1H20 1H19 Opening Net (Debt) (38.7) (107.4) Closing Net Cash 102.9 37.5 Debt Covenants Fixed Charge Cover (FCCR) Ratio Minimum Shareholders’ Funds Net Leverage Ratio 1.64x 1.64x $627m $618m =<2.25x $602m 1.61x =>$400m =>1
Slide 18: In Summary
In Summary For personal use only • We have continued to deliver financial improvements and strengthen the balance sheet in a subdued trading environment: - Improved OGP margin - Focus on simplification; CODB* down 2.6% - NPAT* up 0.4%, despite lower sales - Operating cash flow (before interest & tax
Slide 19: Customer First Plan
For personal use only Introduction 1H20 Results Customer First Plan Conclusion
Slide 20: Our Customer First Plan – Australia's Favourite Department Store
Our Customer First Plan – Ensuring Myer is Australia’s Favourite Department Store For personal use only Providing friendly helpful service, high quality and exclusive brands, and offering compelling value Our Values Customers Come First Own Our Future Do What’s Right One Inclusive Team Our Prioritie
Slide 21: Customer First Plan: Transform the Customer Experience
Customer First Plan: Transform the Customer Experience For personal use only • Customer satisfaction with team members up 1% • Expanded experiential retail and personalisation e.g. Harry Potter, Litmus Labs, Giftorium expansion including FAO Schwartz Progress • World class store destination upgrades
Slide 22: Customer First Plan: 'Only at Myer' Brands and Categories
Customer First Plan: ‘Only at Myer’ Brands and Categories For personal use only • 135 new brands launched since August 2019; including YD, Forever New, Raging Bull, Lorna Jane, Reebok, Pixie Mood, Underlines, DKNY • Menswear, Homewares, Childrenswear and Cosmetics categories performed well, despite
Slide 23: Customer First Plan: Continue enhancing myer.com.au
Customer First Plan: Continue enhancing myer.com.au For personal use only • Online sales* now 10.5% of total sales, with gross profit growing faster than sales • Improved customer satisfaction score; up 5% • Enhanced systems and processes successfully managed peak trading Progress periods; Black Fri
Slide 24: Customer First Plan: Efficiency Levers
Customer First Plan: Efficiency Levers For personal use only • Store closures 27,000m2; Logan closed January 2019, Hornsby closed January 2020 • Space reduction agreed for GLA of 22,000m2; including Belconnen, Cairns, Emporium Space • Further stores under active negotiation for handback; GLA reducti
Slide 25: Conclusion
For personal use only Introduction 1H20 Results Customer First Plan Conclusion Aura by Tracie Ellis
Slide 26: Good progress in key areas, progress reflects macro environment
Good progress in key areas, progress reflects macro environment For personal use only • 1H20 Highlights - Disciplined management of costs and cash in subdued trading environment - Merchandise strategy is working in key categories such as Menswear, Homewares, Childrenswear and Cosmetics - Customer sa
Slide 27: Myer Half Year 2020 Results
MARCH 5 2020 For personal use only MYER HALF YEAR 2020 RESULTS TO 25 JANUARY 2020 JOHN KING NIGEL CHADWICK CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
Slide 28: Appendix 1: NPAT Reconciliation with statutory accounts
Appendix 1: NPAT Reconciliation with statutory accounts For personal use only $ MILLIONS ebit interest tax npat Statutory reported result 84.6 (49.8) (10.4) 24.4 Add back: Implementation costs and individually significant items Restructuring and redundancy costs 3.1 - (1.0) 2.1 Clearance Floor closu
Slide 29: Appendix 2: Income statement – AASB Impact
Appendix 2: Income statement – AASB 16 Impact For personal use only $ MILLIONS 1H20 aasb 16 1H20 1H19 CHANGE (statutory) impact (pre-aasb16) (pre-aasb16) (pre-aasb16) Total Sales 1,607.9 - 1,607.9 1,671.4 (3.8%) Operating Gross Profit 629.6 (0.3) 629.3 643.8 (2.3%) Cost of Doing Business* (411.2) (1
Slide 30: Appendix 3: Operating cash flow – AASB Impact
Appendix 3: Operating cash flow – AASB 16 Impact For personal use only $ MILLIONS 1H20 aasb 16 1H20 1H19 (statutory) impact (pre-aasb16) (pre-aasb16) EBITDA* 218.4 (105.3) 113.1 113.6 Less Implementation Costs and ISIs (21.6) 2.6 (19.0) (4.1) Add Non-Cash Asset Impairments 1.0 - 1.0 - Working capita