Business

Myer posts $172 million loss after closing stores during COVID-19

Myer posts $172 million loss after closing stores during COVID-19

Iconic department store Myer has posted an eye-watering loss as the full impact of one of the company’s “toughest ever” decisions is revealed.

The major department store retailer has suffered a statutory loss of $172.4 million for the 2020 financial year, a stark difference to the net profit of $24.5 million reported in the previous corresponding period.

Myer chief executive John King said the decision to close all of its 60 stores over April and May due to the pandemic – resulting in 10,000 staff members being stood down – had been one of the toughest decisions ever made by the company.

“For the majority of the second half, there was substantially reduced traffic to physical stores, particularly to those located in CBD locations,” the company said in its results.

“Myer’s CBD stores represent some of its largest stores with high associated rents and staffing requirements, and therefore the impact on profit as a result of the reduced revenues was exaggerated.”

Myer flagged ongoing restrictions in Melbourne were still causing several of its department stores to remain closed.

Mr King said the onset of the pandemic had changed the way people interact with CBD locations. He expects a number of inner-city workers will opt to work from home for some time.

Total sales for the 12 months ending June 30 were down 15.8 per cent compared with the previous year to $2.5 billion. Myer’s statutory earnings were $78.5 million.

Mr King said while store sales had been impacted over the shutdown, online sales experienced significant growth, with the major department store in August announcing further agreements with Australia Post and Amazon to support digital sales.

“Online sales grew by 98.8 per cent in the second half of financial year 2020 compared to the prior year, and there was particularly strong growth in beauty, up 218 per cent, and homewares, up 177 per cent,” he said.

At June 30, Myer had received $93 million in JobKeeper payments from the Australian Government, with $41 million paid to employees whose remuneration was lower than the required income threshold.

Myer has extended it debt facility, which is worth $340 million, for two years.