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Myer investing in e-commerce range, fulfillment

On Wednesday, Myer CEO John King laid out a plan to reduce the department store’s floor space across the network and make the online business its best and biggest store by moving fulfilment out of stores and into a central distribution centre and increasing the range of items offered online.

“There are no physical limitations to what we can sell online,” King said in a call with investors on Wednesday.

The struggling department store reported a 3.1 per cent year-on-year increase in net profit after tax in the first half of FY19 to $41.3 million, a sign that King’s customer-first turnaround plan laid out last September is beginning to show some positive results.

Investment in online is a core part of that turnaround plan, and the business saw online sales increase 18.6 per cent in the half to $151.2 million, roughly 17 per cent of Myer’s total sales.

King wants to lift that figure to 20 per cent going forward, which he plans to do by growing the range of items offered online beyond what is available in stores, and shifting online order fulfilment out of stores and into a central distribution centre. This, he said, will enable faster fulfilment at lower prices.

Online sales growth in the half was buoyed by a strong Q2, in which Myer did over $10 million in online sales over Cyber Weekend and had its biggest online sales day ever on Boxing Day.

King said he was pleased with the performance of the new Myer website, which launched in September, right before the peak shopping period, and he said the company has the right team in place to lead online growth going forward.

The retailer is currently reviewing its Myer One loyalty program and will provide an update on the offering in September, he said.

Myer’s total sales fell 2.8 per cent in the half to $1.67 billion, and like-for-like sales fell 2.3 per cent; however, operating gross profit margin improved 99bps to 38.5 per cent and the cost of doing business dropped 1.3 per cent.

These improvements were largely due to Myer’s reduction in discounting, increased focus on exclusive brands and new workforce management system, which has enabled the retailer to improve its rostering system. EBITDA improved 4.9 per cent to $113.6 million.

Author: Heather McIlvaine.

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