Company Overview
Myer Company was founded by Sidney Myer, who will be remembered in a long as one of Australia’s great philanthropists as well as a retail visionary. He welcomed customers to his incredible department stores, giving them international class merchandise and services. Currently, Myer Company remains to be the favorite department store in Australia. It has continued to uphold its legacy. Myer Company has been the largest Australia department store offering stylish and fashionable items for more than 100 years. Since its foundation, Myer has been a significant employer and has a great history of local community involvement and philanthropy. In 1900, Sidney Myer and his brother, who were then Russian immigrants, opened a store in Bendigo, country victory. In 1911, Sidney purchased a drapery company in Bourke Street, Melbourne. He later bought several adjoining properties and built a department store in the location, the Myer Emporium. In 1983, Myer bought retail chain grace bros. In 1985, Myer merged with retailer GJ Coles Coy to form Coles Myer Limited (Myer Limited, 2016). These were some of the important chronological events of the company history.
Myer company top management team is made of seven executives. They head the various functional departments of the organizations. The head of the company is chief executive officer and managing director. The company also has chief finance officer, three executive general managers for the following departments namely: stores; property store development and services; strategic planning and business development; human resources, risk, and safety. The company also has chief general counsel and group company secretary, chief merchandise and marketing officer and chief information and supply chain officer. The mission of management team is to be more focused and sharper to serve their priceless customer, driving growth and productivity.
Myer Company was in June 2015 sold to private equity (PE) group, with the leadership of the Texas Pacific Group. Myer is a public corporation listed by Australian Stock Exchange. Myer family is just a minor investor in the company. Myer management team has shares in the ownership of the company. Myer Company owns sixty-five shops in all of the Australian states. It also has a store in Australian Capital Territory. Myer Company headquarters is situated in Melbourne in Victoria Australia. The stores are located with the mixture of main city center facilities, high street and shopping facilities, suburban shopping facilities in the regional New South Wales, Victoria, Tasmania, and Queensland. The store in Bourke Street Mall in Melbourne is the national flagship and was opened in 2011.
The company mission statement is to provide the customers with the best quality of services and make sure they meet time after time and exceed the customer expectations. In September 2015, the company developed a new strategy that will guide them in providing better and focused services. The strategy ensures the clients experience an improved in-store experience offered through targeted customer involvement, improved services, and effective utilization of digital and other online platforms. They aim at giving the buyers with revitalized products offer and a transformed customer shopping experience to meet the client’s needs both at the stores and through online platforms (Umbers and Bracken, 2015, p. 38). They believe their mission statement will be met through engagement of clients.
Company Performance
Myer company sells a wide range of merchandise across men’s, women’s and children’s wear; footwear and accessories; home wares; cosmetics and fragrance; furniture and bedding; books and stationery; toys; travel goods; food and confectionery. Moreover, Myer Company offers various services such as hospitality services; hair and beauty services, bridal services, weight watchers, clothing alterations; conferencing halls; and breast screening services (Gunn and Ward, 2015, p. 10). The department stores have been a stop for many Australian residents because of the availability of unique and creative products that are sold at a welcoming price. The company also offers value-added services and after sale services which have given them a competitive advantage over their competitors. Examples of value-added services are Myer care plan and delivery services among others.
Myer efforts to become the most competition company have experienced many hurdles because of other competing stores in Australia. The major competitors are David Jone, Westfield, Harris Scarfe, target Australia, Kmart Australia, and Wesfarmers limited. Competition affected the performance of Myer by decreasing its sales growth by 2% especially when David Jones introduced discounting (BAC, 2016, p.5). As a way to counter interact competition, Myer Company often uses competitive pricing policy. The policy allows the company to match their price with the competitors under the following conditions. First, if the customer requests for price match before purchase while in Myer Company store. Second, if the product is in stock and can be available for immediate sale by the competitor and Myer Company. Finally, if the store team member is capable of confirming the price and the presence of the product. However, Myer Company does not match its price with the competitors in case of the conditions below. If the price turns to be, lower than the cost of the product they do not lower the price and if the competitors product is not of the same product with that of the Myer company.
Myer company sales increased by 1.7% in the financial year that ended in July 2015 because of increased number of stores opened as well as significant growth of online business. Cosmetics registered a continued growth as well as the entertainment and children’s wear. However, the net debt increased to $388 million from $40 million. It reflected higher working capital and lower profitability. Net interest costs were $22.7 million, which was an increase of 3.7% because of the higher net debt situation. The operating gross profit margin decreased by 40.4%. The main cause of the decline was depreciation of the Australian dollar. During the financial year, there was a reduction in the operating cash from $263 million to $167 million. It reflected the decrease in earning as well as the negative working capital. However, much improvement is expected in 2016 financial year because of the new strategy launched in September 2015 and other major growth projects that have been initiated by the company. Myer Company has announced that their voting changed from to 8.55% to 9.76%. Relevant interests have also changed. However, there was no change with the association as no member ceased their membership. The other announcement made by Myer Company was they had revised the 2016 full Net Profit After Tax guidance to be in a range of $66 million and $72 million without including the implementation costs linked with New Myer. Previously the range was between $64 million and $72 million.
Growth Prospects for the Company
Myer company share price is forecasted to increase by 15.57% from its previous price of 1.06. In 2015, the dividend reported by Myer Company as 0.07 Australian dollar which was a 51.73% of the previous year. However, there is a forecast that the dividends will decrease with 17.59% leading to 0.05 Australian dollars in the upcoming financial years. The annual 2015 financial year earnings were recorded as 0.1236 earnings per share. Moreover, there was a negative growth rate of -16.81% (Mitchell, 2016). However, the revenues are expected to grow by 0.3% from 2015 total revenue of 3.20 billion. It was an increase of 1.67% of 2014 total revenue. When one looks at the SWOT analysis of Myer company, it is easy to understand why the figures of the forecasted growth. The SWOT analysis of this company will be briefly explained in this section of the report. Myer company strengths include strong brand availability and brand reputation in Australia. The other strength is the company focuses on customer engagement while offering service. The company also offers different products with affordable prices offering customers with several choices. The fact that Myer has stores in all Austrian states is strength for the company (Research and Markets, 2015, p. 29). On the other hand, Myer Company has a few weaknesses. It has a channel of distribution that is not well developed, and only serves a few locations in Australia. Myer has no target in the global area since its targets are only in Australia. Finally, retail prices keep increasing and yet they have not adequately used the area in the showroom. Various opportunities are present for Myer Company such as merging with foreign investors who are dominating in the retail sector. There is also an opportunity to improve the sales using creative promotional procedures. They can also improve the showroom performance by effective utilization the staff members. Finally, there is a great opportunity for the company decides to go global (Research and Markets, 2015, p. 30).. On the other hand, Myer Company faces the threats of changing consumer preferences, consumers are reducing their disposable income, and finally it is hard to target different segments of the community.
Myer Company uses time series method to forecast it financial growth. According to Aue and Horváth (2012), time series uses various methodologies that employ past information to forecast the future occurring of the company. It assumes that if the company tracks what happened in the previous years, it is in a better position to get an average prediction of what will happen in the future if the conditions remain the same. According to Janacek (2009), the model has four stages, which are identifying the trend, identifying the variations, identifying the seasonal variations and accepting random variations. The strengths of this model are it is reliable, it is easy to develop seasonal patterns on fluctuations that can be helpful in forecasting the future, and it can be used to determine the trends of a company. The weaknesses of the model are that is not very effective for long-term forecasting because of the many changes in the business environment. The other weakness is that historical information and performance is not always a better indication of future happenings (Madsen, 2008, p.35). Finally, the method is a long-winded and multifaceted process.
Conclusion
In conclusion, Myer Company is a business that has loyalty customers. If the management is keen in formulating strategies that will increase sales and reduce the debt the company is facing. The company can venture several opportunities discussed in the report such as the global market. It will also ensure the company growth rate is positive and not negative as forecasted.
References
Aue, A. and Horváth, L. (2012). Structural breaks in time series. Journal of Time Series Analysis, 34(1), pp.1-16.
BAC, (2016). Myer Holdings Limited Fundamental Company Report Including Financial, SWOT, Competitors and Industry Analysis. [online] Available at: https://pdf.marketpublishers.com/bac_swot/myer_holdings_limited_swot_analysis_bac. pdf [Accessed 3 May 2016].
Gunn, D. and Ward, M. (2015). Myer Holdings Limited 2015 Annual Report and Notice of Annual General Meeting. Melbourne: Myer Holdings Limited.
Janacek, G. (2009). Time Series Analysis Forecasting and Control. Journal of Time Series Analysis.
Madsen, H. (2008). Time series analysis. Boca Raton: Chapman & Hall/CRC.
Mitchell, S. (2016). Myer posts strongest sales growth in six years but profits slip 4pc. [online] Financial Review. Available at: http://www.afr.com/business/retail/myer-posts-strongest sales-growth-in-six-years-but-profits-slips-4-pc-20160315-gnj754 [Accessed 3 May 2016].
Myer Limited, (2016). History. [online] Myer. Available at: http://www.myer.com.au/p/about myer/the-company/about-us/history/ [Accessed 3 May 2016].
Research and Markets, (2015). Myer Holdings Limited : Retailing - Company Profile, SWOT and Financial Analysis. [online] Researchandmarkets.com. Available at: http://www.researchandmarkets.com/reports/2422655/myer_holdings_limited_retailing_ company#rela0 [Accessed 3 May 2016].
Research and Markets, (2015). Myers Industries Inc. Company Profile - Business Description, Strategies, SWOT and Financial Analysis. [online] Researchandmarkets.com. Available at:http://www.researchandmarkets.com/reports/2655796/myers_industries_inc_company _profile_business#rela5 [Accessed 3 May 2016].
Umbers, R. and Bracken, D. (2015). New Myer: a sharper and more focussed offer to serve a more valuable customer, driving productivity and growth. [online] Available at: http://www.asx.com.au/asxpdf/20150901/pdf/430zzf7dzqdc2x.pdf [Accessed 3 May 2016].
