Chairman’s Letter

Chairman’s Letter

This is Myer’s first Annual Review as a listed public Company, and my first as the Myer Chairman, and I would like to thank you for your support as a shareholder and as a customer over the past year.

Myer’s transformed business model delivered a solid financial performance. During the past 12 months, we have navigated significant external challenges. Myer’s listing in November last year coincided with very turbulent global equity market conditions. This, together with rising interest rates, and the absence of Federal Government stimulus which had boosted consumer spending the previous year, resulted in a challenging trading environment and fragile consumer sentiment. This has impacted the sales performance of many discretionary retailers, including ourselves. Total sales were up 0.7% to $3,283.6 million. I am pleased to report that we have exceeded our Prospectus EBIT forecast of $261 million to deliver EBIT of $270.9 million, representing growth of 14.9% on the prior year and 3.9% on the Prospectus. This is testament to the resilience and sustainability of the transformed Myer business, and the hard work and dedication of our Chief Executive Officer Bernie Brookes and his team.

Net profit after tax grew by 55.1% to $168.7 million as a result of strong operating performance, working capital management and lower interest costs as a result of our lower debt following refinancing at IPO.

The business is highly cash generative, and this, together with our strengthened balance sheet and robust profit performance, has led Directors to announce a fully franked final dividend of 11.5 cents per share, taking the total for the year to 22 cents per share, fully franked, above the Prospectus range. The dividend will be paid on 4 November 2010 to all shareholders registered on 30 September 2010.

The business is positioned for growth. After four years and more than half a billion dollars of investment in supply chain, technology, brands and stores, we have built what we know to be a world-class operating platform that will give us real competitive advantage and will help sustain our growth into the future. We are now on the cusp of a new phase, the growth phase, which will see us expand our store portfolio by 15 new stores over the next four years. The first of these opened at Top Ryde in New South Wales in August 2010 and the second is due to open at Robina in Queensland in October 2010. The complete rebuild of our Melbourne flagship store is almost complete, with the majority of the store due to be open in time for Christmas, and the team is excited about offering Myer customers a truly international-class retail experience.

Inspiring our customers is at the heart of what we aspire to do. We offer customers a great range of brands, and a wide and meaningful choice irrespective of their budgets. We are continuing to invest in the look, feel and overall standard of our stores, and our customers have responded well to the fresh approach we have taken to visual merchandising. Speed and efficiency are critical for any retail business and we are fortunate to have a fast, low-cost operating platform that enables us to respond to customer preferences quickly and get product into store fast. We continue to strive towards building a Myer team that is passionate, well motivated and incentivised towards delivering a higher level of service for our customers.

People are at the heart of our business. We are privileged to live and work among many communities throughout Australia and we value our relationships with organisations including the Olivia Newton-John Cancer and Wellness Centre Appeal, the Royal Children’s Hospital in Melbourne, the Children’s Hospital at Westmead, the Surf Life Saving Foundation, the Salvation Army and Vision Australia.

I acknowledge the support and dedication of my Board colleagues over the past year, and commend them for their enthusiasm and their willingness to understand and contribute to the Myer business during that time. I would also like to welcome Peter Hay to the Myer Board. Peter’s legal and governance experience will complement a Board already rich with experience across retail, finance, arts and philanthropy. I believe the Board is well credentialed to serve the interests of our shareholders while balancing the interests of our other important stakeholders.

I thank the Myer management team and our 13,450 team members for their hard work, focus and commitment in what has been a challenging year.

I also thank you, our customers and shareholders, for your support during Myer’s first year as a listed company.