AUSTRALIA: Myer FY reaps benefit of restructuring
Australia's biggest department store chain Myer Pty Limited has posted a nine-fold increase in second-half operating profits following an ambitious cost-cutting programme and efforts to sell more profitable clothing brands in its 60-store chain.
Earnings before interest and tax rose to AUD57m (US$49m) in the six months ended 28 July from AUD6m a year earlier, according to Bloomberg News.
Buyout firm TPG Inc removed old inventory, slashed administrative expenses and renegotiated supplier deals to lower costs after acquiring Myer for AUD1.4bn last June.
"The changes we've made over the past 16 months have been about getting the business metrics right and building a strong foundation for the future," chairman Bill Wavish said in the statement.
"The next 12 months will see the completion of that base."
Stocking private brands exclusive to its stores and re-designing its outlets is helping the company lifts profits, the newswire said.
Net income for the year was AUD84m, with no year-before figure provided as the company was formerly a unit of Coles Group Ltd.
Sales for the half rose 2.2% to AUD1.49bn.
Myer's profit margins rose to 5.5% at the end of 2006 from 2.3% 12 months earlier.
Myer is opening five new shops in 2007, its first in three years, bringing its chain to 65 stores with plans to extend its network to 80 outlets as it targets annual sales of AUD5bn.
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