Myer Holdings Limited · ASX:MYR
Myer — H1 2018 Earnings Presentation
26 slides from Myer's earnings presentation, Mar 21, 2018
Slide 1: Myer First Half 2018 Results
21 March 2018 Myer First Half 2018 Results For personal use only Continued strong growth in the online business Renewed focus on product, price and customer service Myer Holdings Limited (MYR) today announced its financial results for the 26 weeks to 27 January 2018 and announced a renewed Company-w
Slide 2: A renewed focus on product, price and customer service
A renewed focus on product, price and customer service Myer Executive Chairman, Garry Hounsell said: “Since becoming Executive Chairman, I have been driving the management team to trade the business more aggressively. To achieve this, I have renewed the entire team’s focus on product, price and cust
Slide 3: 1H2018 Result
1H2018 Result Total sales declined by 3.6% to $1,719.7 million, and sales on a comparable store basis declined by 3.0%. Q2 sales were down 4.2% to $1,020.6 million, down 3.6% on a comparable store basis. This compares to a decline in total sales of 2.8% in the first quarter, and a decline of 2.1% on
Slide 4: CEO Update and 2H2018 Trading
CEO Update The Board remains engaged in the process of identifying a suitably qualified and experienced candidate to serve as Managing Director and CEO of the Company. Interviews have occurred with a number of high quality candidates and Myer will update the market when appropriate. For personal use
Slide 5: For personal use only
information and any action taken on the basis of the information. The information 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”, “project”, “should”, “could”, “would”
Slide 6: Table 1: Profit & Loss Statement
Table 1: Profit & Loss Statement for the 26 weeks to 27 January 2018 1H2018 1H2017 Change vs. LY Change vs. LY $m $m ($m) (%) For personal use only Total Sales 1,719.7 1,784.6 (64.9) (3.6%) Concessions 360.1 386.2 (26.1) (6.8%) Myer Exclusive Brands 281.7 300.2 (18.5) (6.2%) National Brands and othe
Slide 7: Balance Sheet and Cash Flow
Table 2: Balance Sheet as at 27 January 2018 January 2018 January 2017 $m $m Inventory 372 403 Other Assets 43 45 For personal use only Less Creditors (472) (475) Less Other Liabilities (264) (301) Property 23 24 Fixed Assets 430 432 Intangibles 468 1,017 Total Funds Employed 600 1,145 Comprising of
Slide 8: Other Statistics, Shares and Dividends, Debt Covenants
Table 4: Other Statistics and Financial Ratios 1H2018 1H2017 Return on Total Funds Employed* 8.4%** 10.1% Gearing 3.3% (0.7%) Net Debt/EBITDA* 0.13x (0.03x) For personal use only *Calculated on a rolling 12 months basis ** 6.5% if goodwill and brand impairment is excluded from Total Funds Employed T
Slide 9: Myer Holdings Interim Results to January 2018
For personal use only 21 MARCH 2018 MYER HOLDINGS INTERIM RESULTS TO 27 JANUARY 2018 GARRY HOUNSELL NIGEL CHADWICK EXECUTIVE CHAIRMAN CHIEF FINANCIAL OFFICER
Slide 10: The Agenda
For personal use only THE AGENDA Introduction 1H2018 Results Renewed focus 2
Slide 11: Renewed focus on Product, Price and Customer Service to improve trading
Renewed focus on Product, Price and Customer Service to improve trading For personal use only • 1H2018 Net Profit After Tax (NPAT) of $40.1 million pre- implementation costs and individually significant items • Implementation costs and individually significant items of $516.3m (post-tax) including g
Slide 12: The Agenda
For personal use only THE AGENDA Introduction 1H2018 Results Renewed focus 4
Slide 13: Profitability impacted by deterioration in sales and OGP
Profitability impacted by deterioration in sales and OGP • Weak sales: For personal use only $ MILLIONS 1H2018 1H2017 Change - Despite investment in traffic driving initiatives, Sales 1,719.7 1,784.6 (3.6%) marketing - Subdued Stocktake Sale OGP 645.4 682.7 (5.5%) OGP margin (%) 37.53 38.26 -73 bps
Slide 14: Operating Gross Profit margin decline
Operating Gross Profit margin decline Volume reflects Operating gross profit ($ millions) For personal use only • Impact of lower sales 683 Rate reflects • Lower supplier contributions due to: - Reduced purchases (26) - Shift in marketing focus • MEB sourcing benefits • Higher costs of selling inclu
Slide 15: Cost reduction reflects ongoing focus on efficiencies
Cost reduction reflects ongoing focus on efficiencies • CODB reduced by 3.5% For personal use only excluding Marcs & David Cost of Doing Business ($ millions) Lawrence (MDL) • Disciplined cost focus continues, and there remains a 6 pipeline of efficiencies to target (11) 8 539 (4) 537 539 537 198 20
Slide 16: Individually significant items and implementation costs are largely non-cash
Individually significant items and implementation costs are largely non-cash adjustments For personal use only INDIVIDUALLY SIGNIFICANT ITEMS AND IMPLEMENTATION COSTS $ MILLIONS PRE-TAX POST-TAX Restructuring and redundancy costs 6.5 4.6 Store exit costs and other asset impairments 7.2 5.1 Subtotal
Slide 17: Continued strength in cash flows and cash conversion
Continued strength in cash flows and cash conversion For personal use only • Improved cash conversion at 188% $ MILLIONS 1H2018 1H2017 • Inventory position reflects EBITDA* 96 142 Working capital movement 84 76 - Inventory was 7.7% lower Operating cash flow Open to buy (OTB) reductions 180 218 - (be
Slide 18: Balance sheet
Balance sheet • Continued inventory management $ MILLIONS 1H2018 FY2017 1H2017 For personal use only Inventory 372 372 403 • Supplier payables consistent even with Creditors (472) (380) (475) reduction in purchases Other Assets 43 30 45 • Net debt of only $19.9 million, but higher Other Liabilities
Slide 19: Debt
Debt • Satisfied covenant tests at 1H2018 For personal use only • Gearing only 3.3% and remaining liquidity is $400m at 1H2018 • Shareholders funds impacted by impairments • Disciplined approach to capital management • Have commenced refinancing discussions. Syndicated facility expires August 2019 F
Slide 20: The Agenda
For personal use only THE AGENDA Introduction 1H2018 Results Renewed focus 12
Slide 21: Renewed focus on Product, Price and Customer Service: Product and Price
Renewed focus on Product, Price and Customer Service For personal use only Product and Price • New, on trend and exclusive product • ‘Only at Myer’ • Offering key value lines to be more competitive • Focus on key products that have most price transparency • Communicating more effectively with custom
Slide 22: Renewed focus on Product, Price and Customer Service: Service
Renewed focus on Product, Price and Customer Service For personal use only Service • Service is a defining proposition for the department store • Being good isn’t good enough, we have to be the best • Launched a series of new service initiatives and pilots to better serve our customers • Sales commi
Slide 23: Online continues to be the standout result
Online continues to be the standout result For personal use only • Online sales growth YoY of +48.9% - Entertainment category online grew by 61.8% - Click & Collect now represents 19.7% of sales • Enhanced website in development for myer.com.au • Myer Marketplace: A lifestyle destination with curate
Slide 24: Myer Holdings Interim Results to January 2018
For personal use only 21 MARCH 2018 MYER HOLDINGS INTERIM RESULTS TO 27 JANUARY 2018 GARRY HOUNSELL NIGEL CHADWICK EXECUTIVE CHAIRMAN CHIEF FINANCIAL OFFICER
Slide 25: Appendix: Reconciliation with statutory accounts
Appendix: Reconciliation with statutory accounts For personal use only $ MILLIONS EBIT INTEREST TAX NPAT Statutory reported result (476.2) (4.7) 4.7 (476.2) Add back: Implementation Costs and Individually Significant Items Restructuring and redundancy costs 6.5 - (1.9) 4.6 Store exit costs and relat
Slide 26: Disclaimer
Disclaimer Myer shares are traded on the Australian Securities Exchange (MYR). Myer has a Sponsored Level I American Depository Receipt program which trades For personal use only in the United States on OTC Markets (MYRSY). The financial information provided includes non-IFRS information which have