Hard work pays off for Brookes
Unveiling yesterday's profit, Mr Brookes (above) was cautious in describing the more upbeat and bullish trading environment that has emerged over the past six months, but certainly seemed to suggest the worst was over.
He reeled off a list of positive signs that were bolstering the department store's sales trajectory - property prices not declining, sharemarket up, superannuation accounts stronger, low interest rates and good employment figures - that were feeding into a positive consumer psyche.
To be sure, Myer's first-half and second-quarter sales were only up 1.7 per cent and 2.1 per cent respectively, but that needs to be put into context of the past two years when sales dropped through the floor as shoppers turned away from the stores and decided to shove their discretionary cash in the bank.
Myer and Mr Brookes now look like recording four consecutive quarters of comparable store sales growth, the first time Myer will have achieved that feat since 2009-10 when it was run by private equity.
This is what Mr Brookes and his board have been waiting for. During the winter of flat sales Mr Brookes focused on cutting costs and pumping up store margins, including lifting the penetration of Myer-owned brands (now at just under 20 per cent of all sales).
Now come the better times - hopefully. An improving top line will lead to better profits, thanks to the hard work on costs now almost complete.
Frequently Asked Questions about this Article…
Myer CEO Bernie Brookes appears to have entered a purple patch: the business is seeing a more upbeat trading environment after six months of improvement, and the board is beginning to seriously consider succession planning for the long‑serving, popular CEO.
Myer points to several positive macro signs feeding consumer psyche: property prices not declining, a stronger sharemarket, healthier superannuation accounts, low interest rates and good employment figures — all helping lift customer demand.
According to the article, Myer's first‑half sales were up 1.7% and second‑quarter sales were up 2.1%, reflecting a gradual recovery after the steep falls of the prior two years.
Myer looks set to record four consecutive quarters of comparable store sales growth — the first time it has achieved that since 2009–10. Sustained comparable sales growth is important because it signals improving demand at existing stores, not just from new locations or one‑off events.
During the winter of flat sales, Brookes focused on cutting costs and lifting store margins. That included increasing the penetration of Myer‑owned brands, which were part of his margin improvement strategy.
Myer‑owned brands now account for just under 20% of all sales, reflecting the retailer's push to sell more proprietary product to improve margins.
The board's serious consideration of succession planning means Myer is preparing for a CEO transition while Brookes is still delivering improved results. The article suggests his legacy as a good operator will remain intact and a successor would inherit a business with momentum in a still‑choppy market.
The article notes that an improving top line should lead to better profits, especially because much of the cost‑cutting work is now almost complete — meaning additional sales can flow more directly to the bottom line.
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