Myers Financial Performance And Strategies: Essay Analysis And Review.

Financial performance overview

On the financial perspective, Myers has had to increase its capital expenditure. The current share price for the company is $1.10 which is in line with the projected value of the company which is about $1.15.  the companys return on equity increased from 2015 to 2016 by by almost two times, this is 3.4% to  6.14% respectively. On the other hand, return on investment ROI increased from 3.3% in 2015 to 5.58% in 2016. It shows that the company is investing in the right assets and the introduction of efficient company’s operations. The company’s net profit also doubled from 2015 to 2016 from AUD 30 million to AUD 61 million respectively after the new management took over(Florczak, 2002.  The company has sold 11% of its shares to premier which means that there is capital injestion from the deal and it means that the management have funds that will improve critical areas such as improving its top line brands for increased sales. Myers had done so little to in terms of expansion of the stores since 2008 as compared to other stores hence with the new strategy the company is in line to improve its financial perspective even more.

Myers has changed customer perspective by introducing brands that are more desired by the customers. For 2016, the Myers has changed its management and its CEO. The new CEO Richard Umbers has led to improved sales that has put the company on the stock exchange watch list for the first time in seven years after its shares were listed. To increase the customer sales , the company has now focused on the new frontier which is online sales as the reatail sales decline. New strategies of selling such as improving Myers stores outlook  has led to the traditional department stores to perform well. The new management in September last year introduced a new strategy dubbed as ‘New Myer’’. However, what has led to Myers facing off with major global retailers such as Amazon that have entered the Australian market is opening up of new stores and bringing international brands. The company has invested on merchandising which has propelled the company’s flagship brands more to the customers, which has led to increased sales in 2016(Gorton, 2011). By the year 2020, the company projects that the sales would have tripled and the market share increased as well despite competition from global brands.  Thiese is through promotional offers that will bring loyalty to customers.

New management and strategies implementation

Whatever your objective, by creating a sales promotion that is sensitive to time and with good acceptance by your audience, you can encourage correct actions that can answer the previous questions, achieving a growth of your business in the process.

First, Myers has invested a lot of money on improving their stores  to better match customers expectations and also be a level higher than other stores in terms of visuals for the merchandise.  This is  has introduced a new management led by a new CEO who brings a wealth of experience in management. This has led to introduction of new strategies and change of the way things are done (Gorton, 2011).In this sense, it is necessary to emphasize the audit to the main processes of the company , but with a different approach. It is necessary to observe them in their relationship with the external environment of the company (market, competition, customers, technological changes) and the internal environment.(globalization, market, competitiveness) that allow a condensed view of the external environment in which organizations operate. These concepts will serve as a constant reference to reach the central focus: The internal Processes of the company. highlighting those factors that must be taken into account to ensure adequate management (strategy, structure and culture) exposing them from the point of view of their interaction Dynamics sustained on a common basis. In 2016, Myers has changed its management style as part of the New Myers strategy that was introduced in 2015. The reason for the change of internal processes is because  of entry of global retail outlets such as Amazon that bring stiff competition into the market. The other reason for change is because of stakeholder expectations that include customers, shareholders among others.

For 2016, the store has injected more than $600  million in investments. This has helped in reallocating space to brands that are more popular. This is the key initiative in strategy introduced by the company known as New Meyer. The 2016, growth is underpinned by the focus that the company puts on the best performing stores as well as most valuable customers. The company intends to raise more than $200 million from the capital markets to enable them overhaul its departmental stores (Hitt, Ireland, & Hoskisson, n.d.). This was after the more than 70% slump in profit.on customer purchasing patterns. The stores has announced that it will be dumping over 100 brands to make room for new ones based on research on customer purchases. Also, the company intends to use the money from capital markets to boost its flagship brands. Since 2010, Myers sales have been on a decline, however, heading to 2020 the sales for the company are expected to rise due to the closure of tow stores Hurstville and top Ryde and clearing brands. In line with growth strategy the company also plans to increase online sales as a click and collect proportion. They will also fine tune merchandise offering according to store cluster.

Capital expenditure and sales growth

We can define the economic profitability of the company as a magnitude that measures the profits generated by the company per monetary unit invested in the assets of the company. Two factors influence the economic profitability of the company: the margin and the turnover of assets. The margin represents the proportion of sales that ends up in the profit of the company. The rotation of the asset represents what is sold per monetary unit invested in the assets of the company.

The objective of economic and financial profitability goes beyond the liquidity or solvency of the company (Hitt, Ireland, & Hoskisson, n.d.). It is not only about having money or that the company is able to pay its debts, but that the profitability has to be understood as the capacity to return the maximum returns (economic profitability) and, in particular, to its shareholders (financial profitability) .

Financial profitability can be defined as the magnitude of the company's ability to generate net profit for each unit of equity (Steiner, 2014). The improvement of the financial profitability goes, in addition to the improvement of the economic profitability, by the improvement in the sources of financing.

1) Decrease Overheads

It seeks to reduce the structure of the company to the minimum necessary, which we could qualify as an austere company. The reduction of overheads makes the turnover of the asset greater. That is, the same benefit can be generated with fewer assets, eliminating surplus assets, being more efficient.

2) Introduce New Products

Working correctly the four tools of the marketing mix will be very important, but the product is the one that gives meaning to the others. Without product there is no commercial effort worth.

We are probably at the end of an economic phase and, after the crisis, we are opening a new stage. In many markets with recovery will demand new products. These new products can be more demanded than the old ones and generate an improvement in margins.

3) Reduce prices

Reducing prices can make sense in a variety of situations, even though at first glance it involves a reduction in margins. In some companies, particularly those engaged in distribution, lower prices on some products may lead consumers to go to their establishments. It is a way to make known the rest of your products (Steiner, 2014). It talks about products hook. It can also make sense, for example, in cases where the company produces several products that are consumed together, to encourage the demand for other products. This way the reduction of the margin in a product can be compensated with the improvement in other products. It is hoped that, as a whole, the margin will grow or that the foundations for future growth will be felt.

But even if the price reduction could have an impact on the margins, it can make a lot of sense to increase the turnover of the assets (Dooris, Kelley, & Trainer, 2004). Many companies are considering how to bridge a transition from the low-demand era of the crisis to a new one with higher growth, where many of the assets they possess in the low-demand era will be needed. In order not to reduce the size of the company, and to face the costs of liquidating certain assets, it is necessary to give way to greater production and that may require some reduction of margins that can be compensated in the future in a context of greater demand. 

References

Dooris, M., Kelley, J., & Trainer, J. (2004). Successful strategic planning. San Francisco: Jossey-Bass.

Florczak, C. (2002). Maximizing profitability with safety culture development. Amsterdam: Butterworth-Heinemann.

Gorton, B. (2011). Boosting sales. London: Bloomsbury Publishing.

Hitt, M., Ireland, R., & Hoskisson, R. Strategic management.

Steiner, G. (2014). Strategic planning (1st ed.). [Place of publication not identified]: Free Press.