Case of Myers Limited

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Myer’s Holding Ltd. operates 60 departmental stores across Australia. The company’s productportfolio includes womenswear, toys, homeware, beauty, childrenswear, menswear, electrical goods and general merchandise. The company operates under Marcs, David Lawrence and Sass & Bide brand names in Australia. Moreover, it has different sourcing offices in Hong Kong and China (Myer Store, 2020). As a part of audit team, this report is prepared for presenting analysis of three key segments that needs to be focused for audit planning of financial statements for 30th June, 2020. The report is dissected into two major parts with first being the risk assessment followed by implication of COVID-19 for auditing.  


A: Five Key Facts of Myer’s Limited

The key facts of Myer’s Limited as per the financial annual reports of 2019 are outlined below:

  • In 2019, the company appointed Geoff Ikin as the new Chief Customer Officer for managing key customer facing function through online store. The CCO was also made responsible for marketing, advertising, social media, corporate affairs, communication and public relations management. Other than Ikin, Paul Goodall and Tabitha Person also joined the executive team as Executive General Managers of Store Development and People & Culture respectively (Myer's Limited, 2019).  
  • With several new additions to the board (IT entrepreneur Lyndsey Cattermole and a new retailer Jacquie Naylor), the company moved towards equally splitting female and male directors  (Myer's Limited, 2019). This effort was made for demonstrating the commitment to the gender diversity at Myer’s Limited. The workforce comprised of 80.2% females, with 55.5% of leadership roles and 57% NED roles. 
  • The company has added new features of online website by allowing suppliers to use portal for uploading products. During 2019, total 39,000 products were published via portal. The company grew its distribution reach by having over 145 sellers and 58,000 new products sold through online portals.  (Myer's Limited, 2019)
  • RFID smart labels were introduced for Myer for ensuring correct entry of inventory for meeting customers’ needs. RFID enabled company to track movements of the products for improving cost allocation and enhancing customer experience. 
  • The company focused on supporting office efficiency by vacating spaces at Docklands Support Office in July 2019. The offices occupied 30% less space in 2019 and as a result, the company was able to enjoy cost efficiencies  (Myer's Limited, 2019). 

B: Analytical Review of Performance and Financial Position

  • Total sales got down by 3.5% till July, 2019 and then further fell to $1.608 million till January, 2020. The comparable store sales got down by 2.9% till July, 2019 followed by an increase of 0.4% in next six months uptil January, 2020 (excluding Apple & Country Road Group Sales). 
  • Total digital sales grew by 21.9% (to $292 mn) in FY2019 with a followed up increase of $168.2 million in half FY 2020. The digital sales represented 10.5% of total sales by January 2020. 
  • The OGP margin rose by 65 basis points to reach 38.9% in FY 2019 followed by further rise by 62 basis to 39.14% till January,2020.
  • The cost of doing business fell by 3.1% to $1,002 million due to increased efficiencies and cost savings in occupancy, marketing and IT in FY2019. The cost further fell to $516 mn (down by 2.6%) in next six months upto January, 2020. 
  • Operating cash flow increased by $8 mn in FY2019 followed by a decrease of $8 mn in next six months. 
  • EBITDA increased by 7.2% to reach $160 mn in FY2019 followed by an increase by $113 mn in next six months till January, 2020. The EPS rose from 4.0 cents in FY2019 to 5.0 cents till January, 2020.

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