Myer Holdings Limited · ASX:MYR
Myer — H1 2019 Earnings Presentation
30 slides from Myer's earnings presentation, Mar 6, 2019
Slide 1: First Half 2019 Results
6 March 2019 FIRST HALF 2019 RESULTS NET PROFIT AFTER TAX* UP 3.1 % TO $41.3 MILLION Operating gross profit margin up 99 basis points to 38.5% EBITDA* up 4.9% to $113.6 million 1H2019 Results (26 weeks to 26 January 2019) compared to last year: • Total sales down 2.8% to $1,671.4 million; comparable
Slide 2: 1H2019 Results
Myer Chief Executive Officer and Managing Director, John King, said: “This result demonstrates the positive customer response to a number of initiatives from our Customer First Plan, particularly during the all-important Christmas and Myer sale periods. “There are a number of Customer First pilots u
Slide 3: Implementation costs and individually significant items
Implementation costs and individually significant items (post-tax) totalled $2.9 million and as outlined in the September results announcement, included redundancies reflecting the simplification of the organisational structure in the Support Office. Operating cash flow increased by $8 million durin
Slide 4: Efficiency levers
4. Efficiency levers During 1H2019, the online business experienced several unprecedented trading peaks and work is now underway to refine fulfilment for both stores and online, and will result in a more centralised model. Further details will be provided in due course. There are numerous other area
Slide 5: Myer shares are traded on the Australian Securities Exchange
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). The financial information provided includes non-IFRS information which have not been audited or reviewed in a
Slide 6: Appendix 1: Income Statement for the 26 weeks to 26 January 2019
Appendix 1: Income Statement for the 26 weeks to 26 January 2019 1H2019 1H2018 CHANGE CHANGE $m $m $m % Total Sales 1,671.4 1,719.7 (48.3) (2.8%) Concessions 339.5 360.1 (20.6) (5.7%) Myer Exclusive Brands 292.2 281.7 10.5 +3.7% National Brands and other 1,039.7 1,077.9 (38.2) (3.5%) Operating Gross
Slide 7: Appendix 2: Debt Covenants
Appendix 2: Debt Covenants Covenant Covenant January FY19 July FY18 January FY18 Net Leverage Ratio =<2.25 x (0.21 x) 0.72 x 0.13 x Fixed Charge Cover Ratio =>1.40 x 1.61 x 1.59 x 1.65 x Minimum Shareholders’ =>$400m $618m $584m $580m Funds Net Leverage Ratio = (Gross Debt (excluding capitalised bor
Slide 8: Myer First Half 2019 Results to 26 January 2019
MARCH 6, 2019 MYER FIRST HALF 2019 RESULTS TO 26 JANUARY 2019 JOHN KING NIGEL CHADWICK CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
Slide 9: Myer shares are traded on the Australian Securities Exchange (MYR)
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). The financial information provided includes non-IFRS information which have not been audited or reviewed in a
Slide 10: Introduction, 1H2019 Results, Customer First Plan, Conclusion
Introduction 1H2019 Results Customer First Plan Conclusion
Slide 11: 1H2019 Results Summary
1H2019 Results Summary • Total sales down 2.8% to $1,671.4m; comparable store sales down 2.3% Trading • Operating Gross Profit (OGP) down 0.2%; OGP margin up 99bps to 38.52% • Cost of Doing Business (CODB) down 1.3% • EBITDA* up 4.9% to $113.6m Earnings • NPAT* up 3.1% to $41.3m, Earnings per share*
Slide 12: Customer First Plan - progress
Customer First Plan - progress Strengthened • Four appointments to Executive Team; strengthened leadership team now in place Executive Team • Executive incentives aligned to long-term performance Stable platform • Refinanced debt facilities in November 2018 to execute plan • Focus on cash flow manag
Slide 13: 1H2019 Results
Introduction 1H2019 Results Customer First Plan Conclusion
Slide 14: Income statement
Income statement $ MILLIONS 1H2019 1H2018 CHANGE Total Sales 1,671.4 1,719.7 (2.8%) • Sales decline stabilised in Q2, in part due to growth in online Operating Gross Profit 643.8 645.4 (0.2%) • OGP margin improved by 99bps; Cost of Doing Business (530.2) (537.1) (1.3%) reversing recent trend EBITDA*
Slide 15: Q2 results showed some improvements
Q2 results showed some improvements Q2 2019 Q1 2019 1H 2019 • Q2 comparable store sales decline stabilised Total sales movement (YOY) (1.4%) (4.8%) (2.8%) at (0.9%); improved execution of Christmas Comparable store sales (YOY) (0.9%) (4.3%) (2.3%) • Return to strong growth in online business post la
Slide 16: Operating gross profit reflects margin improvement
Operating gross profit reflects margin improvement Operating Gross Profit ($m) 645 644 • OGP impacted by lower sales volumes (19) • Positively offset by: - Focus on profitable sales across all channels: - Reduced sales in lower margin categories and brands OGP Volume Rate & MEB Mix Other OGP - Onlin
Slide 17: Continuing focus on costs and efficiencies
Continuing focus on costs and efficiencies Cost of Doing Business ($m) Myer Group Cost Structure ($m) (4) 537 530 537 (20) Operating Wages 530 Operating Other Costs Support Office CODB Inflation Investment Space Business CODB 1H2018 1H2019 1H2018 in Online Reduction/ Efficiencies 1H2019 Growth Occup
Slide 18: Improving operating cash flow
Improving operating cash flow $ MILLIONS 1H2019 1H2018 EBITDA* 109.5 95.7 • Disciplined capital management continued Working capital movement 77.1 84.1 • Seasonal working capital movement is lower Operating cash flow (before interest & tax) 186.6 179.8 due to timing of payment runs Conversion 170.4%
Slide 19: Balance Sheet
Balance Sheet $ MILLIONS 1H2019 FY2018 1H2018 Inventory 360.1 366.8 372.0 • Inventory down 3.2%, despite bringing Creditors (466.1) (381.2) (471.6) forward stock for Winter19 season launch Other Assets 41.5 35.1 42.6 • Other liabilities reduced as provisions Other Liabilities (242.7) (238.7) (263.7)
Slide 20: Net Debt Reduction and Covenant Headroom
Net Debt Reduction and Covenant Headroom $ MILLIONS 1H2019 1H2018 Opening Net Debt (107.4) (112.8) • Net cash position of $37m, which is $57m higher than same time last year Closing Net (Debt) / Cash 37.5 (19.9) • Headroom in all covenants at 1H2019 • FCCR stabilised and improved compared to FY2018
Slide 21: In Summary
In Summary • Improvements delivered in 1H2019: - Improved OGP margin - Disciplined management of costs - NPAT* +3.1% on lower sales, increased depreciation and interest - Operating cash flow up $8m to $173m, total net debt reduced by $57m • 2H2019: - Disruption associated with brand exits, offset by
Slide 22: Customer First Plan
Introduction 1H2019 Results Customer First Plan Conclusion
Slide 23: Our Customer First Plan
Our Customer First Plan – Ensuring Myer is Australia’s Favourite Department Store 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 Priorities 1 2 3 Transform cust
Slide 24: Customer First Plan: Store Experience and Only at Myer Brands
Customer First Plan 1 Transform Customer Experience in Store 2 ‘Only at Myer’ brands and categories 1H2019 Highlights 1H2019 Highlights • Improved store layouts, brand adjacencies in 23 stores • Return of Myer My Store, award winning Christmas campaign • Merchandise refined for localisation, more pe
Slide 25: Customer First Plan: myer.com.au and Efficiency Levers
Customer First Plan 3 Continue enhancing myer.com.au 4 Efficiency Levers 1H2019 Highlights 1H2019 Highlights • New website significantly enhanced user experience • Strengthened Executive Team, supported by more • Strong online and omnichannel sales* growth in Q2 +28.8%, streamlined, accountable Supp
Slide 26: Conclusion
Introduction 1H2019 Results Customer First Plan Conclusion
Slide 27: We are on the right path but with a lot of work to do
We are on the right path but with a lot of work to do • 1H2019 Highlights - Strengthened leadership team - NPAT* +3.1% despite lower sales, increased depreciation and interest - Disciplined cash management with operating cash flow up $8 million and total net debt down $57m • Focused on delivery of r
Slide 28: Myer First Half 2019 Results to 26 January 2019
MARCH 6, 2019 MYER FIRST HALF 2019 RESULTS TO 26 JANUARY 2019 JOHN KING NIGEL CHADWICK CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
Slide 29: Appendix 1: Reconciliation with statutory accounts
Appendix 1: Reconciliation with statutory accounts $ MILLIONS EBIT INTEREST TAX NPAT Statutory reported result 59.7 (5.2) (16.1) 38.4 Add back: Implementation costs and individually significant items Restructuring and redundancy costs 4.1 - (1.2) 2.9 Underlying result 63.8 (5.2) (17.3) 41.3 22
Slide 30: Appendix 2: Other Metrics and Financial Ratios
Appendix 2: Other Metrics and Financial Ratios 1H2019 1H2018 Return on Total Funds Employed* 9.7% 8.4%** Gearing (6.5%) 3.3% * Calculated on a rolling 12 months basis **6.5% if goodwill and brand impairment is excluded from Total Funds Employed 23