New Myer team to embark on transformation
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Myer shareholders are bracing for a sharp fall in earnings and big asset write-downs and provisions over the next few years as the new management team embarks on a multi-year transformation plan to reshape the 115-year-old department store chain.
Analysts and investors believe the new team, led by former Woolworths and Australia Post executive Richard Umbers, needs to spend at least AUD150 million (USD117m) over the next three years, on top of underlying spending of AUD30 million a year, to reverse the effects of years of underinvestment in e-commerce, IT, service and stores.
Myer’s earnings could fall by as much as 12 percent in 2016 because the investment will precede any significant rebound in sales, squeezing margins.
Questions & Answers
Q.Who is leading Myer's new management team?
Who is leading Myer's new management team?
The new management team at Myer is led by Richard Umbers, who previously held executive roles at Woolworths and Australia Post.
Q.How much additional investment is expected for Myer's transformation plan?
How much additional investment is expected for Myer's transformation plan?
Analysts and investors estimate that at least AUD150 million (USD117m) will be needed over the next three years, on top of the usual AUD30 million annually.
Q.Why is this significant investment needed by Myer?
Why is this significant investment needed by Myer?
The investment is required to reverse the impact of years of underinvestment in e-commerce, IT infrastructure, customer service, and physical stores.
Q.What financial impact is predicted for Myer in 2016 due to this transformation?
What financial impact is predicted for Myer in 2016 due to this transformation?
Myer's earnings are projected to fall by up to 12 percent in 2016 because the investment will happen before any notable recovery in sales, affecting profit margins.
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