After dumping Apple, Myer limps to profit

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After dumping Apple, Myer limps to profit

Decision to dump low-margin products vindicated.

Ailing department store Myer has revealed the impact of its decision to stop reselling Apple products: falling sales but growing profit.

In the latest local retail middle finger to Cupertino, the mid-market stalwart has limped back into black ink by junking minimal margin imported gadgets in favour of home brand lines like Reserve as it tries to use digital offer to boost fading footfall.

Myer announced its intention to dump Apple in March 2019, on grounds that it wanted to devote shelf space to higher-margin products. The retailer said it had tried to negotiate better prices with Apple, but couldn’t make a deal. So it emptied its shelves of fruity phones and computers by May.

And in its annual results announcement (pdf) released yesterday, the company revealed its first net profit growth in nine years, having made it into the black by $33.2 million for the year with profit growth of 2.2 percent. 

The numbers weren’t all nice: sales fell 3.5 per cent to $2.99 billion and same-store sales dropped by 2.9 per cent.

Five times in its results announcement Myer pointed out that the same-store sales figure was only down by 1.3 per cent once quitting Apple was taken into account.

Execs also crowed that their plan to pursue high-margin fashion brands that sell exclusively at Myer paid off, and helped the chain to solidify cost-cutting gains that came from renovating and shrinking stores (and closing some too).

None of which will worry Apple, which in July posted record Q3 revenue of US$53.8 billion (AU$79 billion), 59 percent of it from outside the USA.

Myer was also chuffed with its online store, which grew quickly and accounted for 9.8 percent of sales and was counted as its largest single store.

The figures are a little bit cloudy though, given the mix. Myer might not sell Apple anymore but it consumes a heap their tablets

"Online sales includes Marcs and David Lawrence (MDL) and sass & bide online sales, Myer Market but excludes $29.8 million via in-store iPads."

"Digital sales comprise online sales and sales via in-store iPads." Myer said in results footnotes.

That's right folks ... you can't buy an iPad at Myer anymore, but you can use one in-store to buy stuff online.

Aside from that IT costs went down, digital sales went up. 

We're a bit confused so we'll stop there.

With Julian Bajkowski.

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