Half Year 2025 Myer Holdings Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Allan Franklin - Canaccord Genuity - Analyst : Yeah, morning. Well, thank you for your time. Yeah, great to see the detail, within the results and certainly looking forward to the Investor Day in a couple of months. If I could please kick off just to get a bit of detail on what worked? What worked well through January? And I appreciate what you said about the February period, but to what extent to the January performance, perhaps, some surprise to the upside? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 10:30PM, MYR.AX - Half Year 2025 Myer Holdings Ltd Earnings Call

Question: Allan Franklin - Canaccord Genuity - Analyst : Yeah. No fair. Thank you. And it might be -- correct me if I'm wrong, I guess, but it looks like the remaining periods 33 to 52 weeks are slightly negative in terms of a comp.

Question: Allan Franklin - Canaccord Genuity - Analyst : Oh, thank you. And just to clarify a couple of things on the SBMDL side, just to clarify to get that turnaround through FY26, to what extent is that cost out? Or any sort of sales growth or turnaround required from FY25?

Question: Allan Franklin - Canaccord Genuity - Analyst : Thank you. Just the last one, just on CODB. Appreciate some of it is drawn out there, but just to sort of think through, do we continue to allow for growth in the EBA through second half and beyond? And I guess do we add back a little bit of cost for Werribee, being closed in the prior period?

Question: Allan Franklin - Canaccord Genuity - Analyst : Helpful, thank you.

Question: James Tracey - Blue Ocean - Analyst : Hi, Olivia. Thanks for taking my question. Questions, two questions for me. First of all, I'm at the trading update in January, you provide an indication that pre-AASB 16 would be $48 million. And I think it's -- I mean at $59 million on the same basis. So could you talk to where I guess you've done better? The second question is around the cost savings you've talked to a $30 million synergy target. Could you, I guess, break down the buckets in which they fall and also talk about the cost savings that you've been out to that and by $10 million and then also the debt refinancing of $11 million. Are they inclusive within that $30 million or are they additional? Thank you.

Question: James Tracey - Blue Ocean - Analyst : Yeah, got it. And just one quick thing, your rent, could you just clarify what your sort of overall, I guess pro-forma rent charges currently, and you didn't really talk about opportunities around sort of property optimization and so on. Is there an opportunity to improve, I guess the rent-to-sales ratio and therefore the margins, longer term, possibly, outside of that $30 million?

Question: James Tracey - Blue Ocean - Analyst : Thank you, Olivia.

Question: Aryan Norozi - Barrenjoey - Analyst : Hi, Tim. I hope you're well. Just the first one for me, on the trading update, so total sales down 2.6%, and then like-for-like, adjusted for temporary impacts flat. Just what would the 2.6% be if you adjusted for those impacts? I'm just looking for an [ample], for ample number for the total sales update. So basically if the -- if you update the total sales number for those temporary impacts, would it be flat as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 10:30PM, MYR.AX - Half Year 2025 Myer Holdings Ltd Earnings Call

Question: Aryan Norozi - Barrenjoey - Analyst : Okay, so just to confirm, if your total sales are down against three, your comps are down three. And then if you adjust for it, your total sales are flat, and your comps are also flat. So there's very little movement from sort of stock growth between the two brands, overall. Is that fair?

Question: Aryan Norozi - Barrenjoey - Analyst : That perfect. Great. And then just on the $10 million EBIT benefit from -- and by, I'll just shorten it. That's not a run rate, right? That's just like FY26 EBIT will be $10 million higher from that initiative, is that correct or is it something that throughout the course of the -- ? Yeah. Okay, cool. And then the second half you mentioned the cost savings are from the -- will be offset from restructuring once you take the restructuring cost bill over the line?

Question: Aryan Norozi - Barrenjoey - Analyst : Gotcha. Very quick one. Just gross margins, am I correct in saying FX headwinds from a stronger US dollar, that's going to bite more in fiscal potentially if it does bite in fiscal '26? That's why '25 didn't include a lot of headwinds from FX. Is that a fair comment?

Question: Aryan Norozi - Barrenjoey - Analyst : And then just the NBC, so the $12 million headwind in first half goes to $2 million in the second half. But then on, in addition to the $2 million, there'll be some remediation cost. It is a good way of thinking about those costs that it's obviously going to be less than what you incurred in the first half, total, but more than zero. So like, I don't know, $5 million or $6 million of total headwinds from NBC versus --

Question: Aryan Norozi - Barrenjoey - Analyst : Gotcha. And the timing of the other synergy, so you've had $30 million-plus is the aim. You've automatically done $11 million through the finance, refinance, which I suspect that's a pro-forma fiscal '26 saving. So the other $20 million-plus of synergies, is that more going to be waited to fiscal '27 now? Or is that more of a '26 story? Like how do we just think about the phasing of those cost savings?

Question: Aryan Norozi - Barrenjoey - Analyst : Yeah. And how come the refinancing is a $3 million saving on the debt in the second, so $3 million is the savings first half versus the second half, right? So the $7 million finance cost becomes $4 million. But given you haven't refinanced, so you've refinanced, but the existing facility hasn't expired yet. So what happened? What's going on there?

Question: Aryan Norozi - Barrenjoey - Analyst : Yeah, so the annual interest expense that MYER will pay from fiscal '26 onwards will be about $7 million?

Question: Aryan Norozi - Barrenjoey - Analyst : Okay. But sorry, your first half '25 interest cost was $7 million?

Question: Aryan Norozi - Barrenjoey - Analyst : That's gross interest cost, and the second half is $3 million lower. So it's $4 million in the second half?

Question: Aryan Norozi - Barrenjoey - Analyst : And so, and there's an $11 million saving in general. So if your first half annual finance cost is $14 million so $7 million times two, and it falls to $3 million per annum? So that that's how it -- ? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 10:30PM, MYR.AX - Half Year 2025 Myer Holdings Ltd Earnings Call

Question: Aryan Norozi - Barrenjoey - Analyst : $2 million. Okay, perfect. Really appreciate that. Thank you.

Question: Joseph Michael - Morgan Stanley - Analyst : Morning, Olivia. Morning, Andrew. Thanks for taking my questions. Just had a few, just on the gross margins, so it looks like shrinkage is normalizing a little bit down 13%. Can you remind us of how much shrinking expense is above sort of more normalized levels, just trying to understand as that unwinds what the gross margin benefit will be?

Question: Joseph Michael - Morgan Stanley - Analyst : Okay, got it. Then the next question I had is just around the balance sheet. Net cash really strong, well above $200 million. How should we think about the priorities from a capital management point of view between sort of organic growth, inorganic, returning some of that cash to shareholders, how do we think about the priorities there?

Question: Joseph Michael - Morgan Stanley - Analyst : Okay, great. And then last question I had is just around the trading update. I know there's already been a few questions there, but is it a fair comment to say that things are stabilizing? It looks like things slightly improved from the January trading update. If you normalize the one-offs into the second half, then comps are flat and total sales are flat. I know it's still tough out there but is it a fair comment to say that things are stabilizing in a tough backdrop?

Question: Joseph Michael - Morgan Stanley - Analyst : Got it. Thank you.

Question: Chami Ratnapala - Bell Potter Securities - Analyst : Thank you. Good morning, Olivia, Andrew, and Kathy as well. Welcome, Kathy. A few questions from me, first. I think quite a few on the trading updates, so I might not go there. Maybe on the active customer side, nice to see sort of a growth in those active customers. And you've called out some new MYER customers as well. I believe that the tiers in the loyalty program, that's been started towards the end of last calendar year. Has there been any sort of early signs associated maybe you talk to us if there has been any changes in the underlying sort of My One custom base as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 10:30PM, MYR.AX - Half Year 2025 Myer Holdings Ltd Earnings Call

Question: Chami Ratnapala - Bell Potter Securities - Analyst : Perfect. Thanks, Olivia. And the next one would be on sourcing. I think with Apparel brands coming over, there will be an even larger penetration to China. How do you, what are you seeing, among the current sort of factory partners? I mean quite a bit of volatility at the moment. I think I'm sure there are lots of negotiations going on as well. But maybe, firstly to Australia as well and then to you guys how do you all think about the impacts positively or negatively out of this?

Question: Chami Ratnapala - Bell Potter Securities - Analyst : Yeah, sorry. I should have actually said that. I mean I was more referring to the current tariff environment for --

Question: Chami Ratnapala - Bell Potter Securities - Analyst : Perfect. Yeah, and my last question is I understand that some more, to, what do you call it, leases are coming up for expiry. What's the view and what's the thinking on renewals and also new stores as well just staying in MYER for the moment? Yeah.

Question: Chami Ratnapala - Bell Potter Securities - Analyst : Perfect. Thank you very much for taking my questions. All the best.

Question: Shaun Cousins - UBS - Analyst : Oh, great. Good morning, Olivia and Andrew. Maybe just regarding the NDC. Can you just talk a bit about the $5 million to $10 million benefits? Is that really around lower cost online fulfillment? Or is it also the benefit of effectively pushing in product in a little bit of a lighter fashion and then chasing winners, such that you get less marked down in the store, just a question on the [5 to 10] the completion? And then just the timing, given the challenges that have been experienced in the first-half '25 and what will flow to the second half, should we expect the 5 to 10 really be a fiscal '27 or could it actually be realized in fiscal '26, please?

Question: Shaun Cousins - UBS - Analyst : Great and thank you. You know, my second question just around the variation by state. You called that out. Was there any unconscious it's a very small time period? But was there any impact in Queensland, be it from Cyclone Alfred and and the floods and the disruption that -- ?

Question: Shaun Cousins - UBS - Analyst : And the variation by state is that the state that gets called out by many retailers that's having a tougher time is Victoria. Is that what you are you seeing that in your business as well?

Question: Shaun Cousins - UBS - Analyst : Great. And finally, just regarding the shrinkage comment, does that include shrinkage and theft of concession brand product? Or is that $40 million, you mean -- you referenced [32, 35]?

Question: Shaun Cousins - UBS - Analyst : Understood. So thank you for the clarification.

Question: Garth Francis - MST Marquee - Analyst : Hi. Good day, Olivia, Andrew, and Kathy. Thanks for taking my questions. If I may turn back to the trading update, so can you spell out, how Apparel brands have performed in those first five weeks? Or is this the number that you provided is that exclusive of the Apparel brand's performance?

Question: Garth Francis - MST Marquee - Analyst : Right, terrific. Okay. And then just on the category performance you called our Apparel, can you give us a sense of whether beauty had also been impacted with, there's a large, entity up for sale and whether they were more promotional just to -- ?

Question: Garth Francis - MST Marquee - Analyst : All right, perfect. And then, the CapEx I understand, this is probably more for the strategy day, but CapEx done and focus on the NDC for this heart. Can you just give us a sense of whether, this is the sort of level of CapEx just for the second half, given the disruptions that still being bedded down? Or if we should expect that to pick up again, closer to what was paid in the second, in the first half of last year?

Question: Garth Francis - MST Marquee - Analyst : Thanks. And then just maybe on the working capital side, you mentioned the Chinese New Year and the pull forward for winter inventory, as part of the reason for the inventory build, payables was also up quite significantly. Is that partly through that, but is there -- were there any other timing issues around pay the payables increase that we should be aware of?

Question: Garth Francis - MST Marquee - Analyst : Alright, perfect. Thanks very much.

Question: Allan Franklin - Canaccord Genuity - Analyst : Thank you. Sorry. I will bite my tongue, just noting the time has passed. I'll hold the question for later. Thank you.