Myer Holdings Limited · ASX:MYR
Myer — H1 FY2008 Earnings Presentation
47 slides from Myer's earnings presentation, Mar 27, 2008
Slide 1: Half Year Results
Half Year Results for the six months to 26 January 2008 After 22 months of Myer’s 50 month Turnaround Phase Our Vision is to be an International Class Retail Business providing Inspiration to Everyone 27 March 2008
Slide 2: Agenda
Agenda Turnaround Phase 1. Overview 2. Financial review 3. Operating update Growth Phase 4. Building for the future 5. Outlook 2
Slide 3: Agenda
Agenda Turnaround Phase 1. Overview 2. Financial review 3. Operating update Growth Phase 4. Building for the future 5. Outlook 3
Slide 4: First half highlights
First half highlights • Earnings before interest and tax up 23.5% to $152m • Net profit after tax up 52% to $79m • Balance Sheet stronger, with Net debt reduced by 34% since acquisition to $643m • 9 new stores signed to support expansion of chain to 80 stores during Growth Phase Solid result after 2
Slide 5: Good progress after 22 months of Myer's 50 month Turnaround Phase
Good progress after 22 months of Myer’s 50 month Turnaround Phase Achieved In progress 101 business improvements 81% complete 101 business improvements on track for (FY07: 65%) 9 completion by late 2008 World Class Supply Chain established and operating ahead of design metrics – Distribution New Poi
Slide 6: Halfway through Turnaround Phase, building blocks for Growth Phase coming into place
Halfway through Turnaround Phase, building blocks for Growth Phase coming into place Turnaround Phase Growth Phase 50 months to July 2010 48 months to July 2014 FY 06 07 08 09 10 11 12 13 14 Net new stores 1 4 0 5 6 4 Chain 60 61 65 65 70 76 80 Sales ($bil) 3.17 3.29 EBIT ($mil) 73 180 215* EBIT to
Slide 7: Agenda
Agenda Turnaround Phase 1. Overview 2. Financial review 3. Operating update Growth Phase 4. Building for the future 5. Outlook 7
Slide 8: Earnings before interest and tax up 32%, Net profit after tax up 52%
Earnings before interest and tax up 32% H1 FY08 H1 FY07 % change % change like-for-like Sales including concessions $1,829m $1,796m 1.8%* 3.7% EBIT $152m** $123m 23.5% 32.2% EBIT/Sales (%) 8.3% 6.8% Net profit after tax $79m $52m 52.0% *Sales growth below like-for-like growth due to store closures a
Slide 9: Like-for-like Sales up 3.7%
Like-for-like Sales up 3.7% • Sales up 1.8% to $1.829 billion and like-for-like Sales up 3.7%, in line with expectations • Sales growth below like-for-like growth due to store closures, Hobart fire and refurbishments • Sales of Private Brands* remain constant at circa 15% • Transfer of some brands i
Slide 10: Financial summary
Financial summary H1 FY08 $m H1 FY07 $m % change Like-for-like Sales including concessions 1,829 1,796 1.8% 3.7% Operating gross profit 715 705 39.1% 39.2% Costs 536 561 29.3% 31.2% EBITDA 179 144 24.3% Earnings before interest, tax, depreciation & amortisation 9.8% 8.0% Depreciation 27 21 Earnings
Slide 11: Positive EBIT trends
Positive EBIT trends EBIT $m EBIT to Sales % 250 10 H1 FY H1 FY 8.3 200 8 180 6.8 150 6 5.5 152 123 3.9 100 4 73 2.3 50 67 2 0 0 HY06 FY06 HY07 FY07 HY08 FY06 FY07 FY08 FY06 FY07 FY08 Significant opportunity to further improve EBIT to Sales margin during Turnaround Phase 11
Slide 12: Net debt reduced by 34% since acquisition
Net debt reduced by 34% since acquisition • Net debt reduced to $643m after $m sale of Melbourne store in August 1,200 34% reduction 2007 ($605m) and capital return 979 in September 2007 ($560m) 1,000 • Dubbo, Bendigo and Ballarat 800 723 704 properties to be sold and leased 643 back (approximately
Slide 13: Balance Sheet remains strong
Balance Sheet remains strong $ Mil H1 FY08 H1 FY07 FY07 Fixed Assets 247 203 238 Properties 29 373 372 Inventory 366 367 367 Other Assets 137 27 138 Creditors / Provisions -716 -616 -739 Funds Employed 63 354 376 Intangibles 869 833 863 Total Business Capital 932 1187 1239 Debt -624 -519 -521 Cash 2
Slide 14: Agenda
Agenda Turnaround Phase 1. Overview 2. Financial review 3. Operating update Growth Phase Growth Phase 4. Building for the future 5. Outlook 14
Slide 15: World class supply chain fully operational
World class supply chain fully operational • Major Turnaround Phase initiative operating ahead of design metrics • Four stand alone Regional Distribution Centres opened, on time and ahead of budget with DC costs down more than 40% – 12 months ahead of schedule • Improved speed to market for overseas
Slide 16: Growing collaboration with suppliers
Growing collaboration with suppliers • Strategic objective plans with major trading partners being introduced • Commenced roll-out of stock forecast to suppliers • Category plans under development by buyers in liaison with major trading partners • Myer now providing visibility on marketing plans to
Slide 17: Investing in information technology to support growth of business
Investing in information technology to support growth of business • Mymerch IT platform rolled out and majority of legacy systems have been decommissioned • New IT systems in place for all Distribution Centres • Operational issues with new ordering system fine tune • New point-of-sale system underwa
Slide 18: Improving people practices
Improving people practices • Signed multi-year enterprise bargaining agreements for all stores and concluded new employment agreements for all distribution centre staff • Extended next stage of incentive plan to benefit 300 managers • Over 80 participants in the second Graduate Program of 2008 and e
Slide 19: Improving people practices: Myer for Me
Improving people practices: Myer for Me • Significantly expanded program to reward our team of over 19,000 around the country. New benefits to commence 1 April 2008 • Focused on attracting and retaining talent and enhancing customer service and selling skills • As part of this program, we are the fi
Slide 20: Building a sustainable business
Building a sustainable business • Plan to invest $2m as part of commitment to reducing energy costs across the business through the installation of improved lighting systems in stores • Signatory to National Packaging Covenant – obligation to continually review packaging standards and usage • Strong
Slide 21: Loyalty and marketing
Loyalty and marketing • Myer One loyalty card members accounting for over 55% of company sales • Continued enhancement of Myer Black Store Card and roll-out of Myer Visa credit card • Increased exposure of Jennifer Hawkins as the face of Myer • Expanded commitment to fashion at thoroughbred racing –
Slide 22: Loyalty and marketing
Loyalty and marketing Improved loyalty and marketing programs build customer relationships 22
Slide 23: Local community marketing
Local community marketing • Individual store budgets for local community marketing doubled to over $3m • Regular in-store theatre and events to drive customer traffic, enhance shopping experience and drive brand awareness • Extensive local community involvement including: – Ballarat Home Show – Geel
Slide 24: New York, New York
New York, New York • Transforming five downtown stores into 'Mini- Manhattans' during the last three weeks of May • First retail concept in Australia designed to drive foot traffic and sales through innovative PR and events based marketing • Launched with Myer designers during New York Fashion Week
Slide 25: In-store innovation and theatre
In-store innovation and theatre • Continued roll-out of new brands and concepts across the business • Launch of two ‘Intimately Beckham’ fragrances • Opened exciting “store-within-store” concepts – first Nespresso concept store in Brisbane City – first 20 Vodafone concept shops – 5 Laubman & Pank Op
Slide 26: Continue to attract high profile international and national brands
Continue to attract high profile international and national brands • Strong category performances as clearer brand architecture took effect, for example in Womenswear and Intimates • Secured several key new and exclusive international brands – Paule Ka, Moschino Cheap&Chic, Vivienne Westwood Red Lab
Slide 27: Agenda
Agenda Turnaround Phase 1. Overview 2. Financial review 3. Operating update Growth Phase Growth Phase 4. Building for the future 5. Outlook 27
Slide 28: Brand positioning to support our vision for Myer
Brand positioning to support our vision for Myer Vision Our Vision is to be an International Class Retail Business providing Inspiration to Everyone Brand Proposition To excite, inspire and reward our customers Suppliers Customers Staff Real brands Brand logic Elevated role New products Broader choi
Slide 29: Myer has a strong portfolio of international and national brands
Myer has a strong portfolio of international and national brands Donna Karan Cacharel Hugo Boss Camilla & Marc Yeojin Bae TL Wood Bettina Liano Carla Zampatti Arabella Ramsay Mad Cortes Nevenka Charlie Brown Nicola Finetti Jayson Brunsdon Karen Walker Wayne Cooper Josh Goot Leona Edmiston Kate Sylve
Slide 30: Brand architecture to appeal to every customer
Brand architecture to appeal to every customer Designer Brands Donna Karan Yeojin Bae Arabella Ramsay Nicola Finetti Josh Goot Sonia by Sonia Rykiel Cacharel TL Wood Mad Cortes Jayson Brunsdon Leona Edmiston Narcisco Rodriguez Bettina Liano Nevenka Karen Walker Kate Sylvester Pleasure State Hugo Bos
Slide 31: Offering quality and value at different price points
Offering quality and value at different price points My Style Designer Brand National Brand Proprietary Designer Brand Myer Fashion Label Mad Cortes Cue Wayne by Wayne Cooper Basque Freshness and fashionability at different price points 31
Slide 32: Offering quality and value at different price points
Offering quality and value at different price points My Style Designer Brand National Brand Proprietary Designer Brand Myer Fashion Label Hugo Boss Dom Bagnato Jeff Banks blaq Freshness and fashionability at different price points 32
Slide 33: Offering quality and value at different price points
Offering quality and value at different price points My Home Designer Brand National Brand Proprietary Designer Brand Myer Fashion Label Missoni Home Sheridan Premier Marie Claire Vue Freshness and fashionability at different price points 33
Slide 34: Capital expenditure twice depreciation to accelerate growth
Capital expenditure twice depreciation to accelerate growth $m 180 160 160 150 150 140 25 16 21 30 20 32 120 20 21 20 20 90 44 20 26 30 60 26 42 57 30 59 46 21 14 0 FY08 FY09 FY10 FY11 New Stores Refurb's IT Brand presentation Support Centre Other Annual capital expenditure since acquisition more th
Slide 35: Signed lease agreements on 9 new full-sized stores to support chain expansion to 80
Signed lease agreements on 9 new full-sized stores to support chain expansion to 80 stores No. of Stores 80 80 76 70 65 65 61 60 New Stores +4 +0 +5 +6 +4 40 20 0 2007 2008 2009 2010 2011 2012 • All these new stores are full-sized in the range of 9,000 – 12,000 square metres • Greater certainty with
Slide 36: New Eastgardens store trading 30% above previous tenant
New Eastgardens store trading 30% above previous tenant Eastgardens opened as Myer store Excellent customer response 36
Slide 37: Store refurbishment program to delight customers and grow sales
Store refurbishment program to delight customers and grow sales • Major commitment to store refurbishment program to better reflect Myer’s market position • 6 stores due for refurbishment in calendar 2008 including: – Melbourne – Sydney – Doncaster – Geelong – Northland – Canberra • Chermside refurb
Slide 38: Chermside refurbishment - before
Chermside refurbishment - before Kitchenware 38
Slide 39: Chermside refurbishment - after
Chermside refurbishment - after Significantly ahead of last year and expectations 39
Slide 40: Chatswood refurbishment
Chatswood refurbishment Customers responding well to introduction of 70 additional brands 40
Slide 41: Myer Melbourne re-development
Myer Melbourne re-development • Visited every Major Department Store in the world as well as Specialty, to determine world's best in concepts, design and Customer Service initiatives • Working with our Trade Partners to create a world class department store • Receiving customer feedback and ideas vi
Slide 42: Myer Melbourne re-development
Myer Melbourne re-development 42
Slide 43: Myer Melbourne re-development
Myer Melbourne re-development 43
Slide 44: Agenda
Agenda Turnaround Phase 1. Overview 2. Financial review 3. Operating update Growth Phase Growth Phase 4. Building for the future 5. Outlook 44
Slide 45: Turnaround Phase focused on delivering permanent positive change
Turnaround Phase focused on delivering permanent positive change Turnaround Phase (2006 – 2010) Growth Phase (2010 – 2014) Priorities for the next 6-12 months Ongoing priorities Separate from Coles (April 2008) and Focus on top-line growth and operational fine progressive development of IT tuning to
Slide 46: Current trading and guidance
Current trading and guidance • Following strong sales in January, February sales were less buoyant but like-for-like sales were positive. March to date has deteriorated into negative like-for-like territory, and the consumer is clearly cautious particularly in Victoria, New South Wales, Tasmania and
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