SYDNEY — Myer Holdings Ltd. unveiled a new five-year turnaround plan after posting a nearly 70 percent slide in full-year net profit.
Australia’s largest listed department store chain said Tuesday its net profit for the year ending July 25 slid 69.7 percent to 29.8 million Australian dollars, or $21.8 million at average exchange for the period. Total sales increased 1.7 percent to 3.20 billion Australian dollars, or $2.33 billion. They rose 1.1 percent on a same-store basis.
Earnings before interest, taxes, depreciation and amortization was down 11.6 percent to 223.2 million Australian dollars or $163 million.
The embattled department store chain has lost two-thirds of its market value after a TPG Capital-led consortium sold the company back to the market in November 2009.
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The pillars of the “New Myer” turnaround strategy include a rationalization of the store network, to produce an “at least” 20 percent smaller footprint than the current 62 stores; an enhanced omnichannel strategy; improved customer service and a revitalized merchandise assortment. The company has already jettisoned 100 underperforming brands. Myer is investing 600 million Australian dollars, or $428 million, in the new plan. A share offer will partially fund the investments.
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Separately Myer said Tuesday it has made a 25 percent equity investment in Topshop’s Australian franchisee Austradia and will roll Topshop and Topman concessions into 20 Myer stores from November 2015, as the British fast fashion retailer’s exclusive local department store partner — adding to Topshop’s existing seven freestanding store network in Sydney, Melbourne, Brisbane and Perth.
Myer forecasts net profit for fiscal 2016, excluding the cost of the overhaul, of between 64 million and 72 million Australian dollars or $46-51 million at current exchange.
“The new Myer strategy is an energetic revitalization of Australia’s best-loved retailer” said Myer chief executive officer Richard Umbers, who said he expects Myer to return to “sustainable” profit growth after the 2015-16 financial year. “We believe that the new Myer strategy is a sustainable business model that will enable us to maintain and improve our competitive position and return the business to sustainable profit growth in the coming years.”