Thank you for standing by, and welcome to Myer half year results 2023. All participants are in a listen-only mode. There'll be a presentation followed by a question and answer section. If you wish to ask a question, you need to press the star key followed by the number one on your telephone keypad. I'd now like to hand the conference over to Mr. John King, CEO. Please go ahead.
Thank you, Winnie. Good morning, everyone, and thank you for joining the call today. Well, good morning to investors and analysts, and also to the media who join us on a listen-only basis. I'm John King, CEO of Myer. I'm joined today by Nigel Chadwick, Myer's Chief Financial Officer. Please note this call is being recorded. Before going any further, I'd like to take a moment to recognize the various traditional lands on which we do our business today, as well as acknowledging Elders, past, present, and emerging. To the agenda for today, I'll begin with an overview of the first of 23 results, then I'll hand over to Nigel, who will provide you with more details on these financials. I'll speak further on our Customer First Plan, the overarching strategy we outlined in September 2018 and underpins everything that we do.
After that, there'll be an opportunity to ask questions. Let me take you through the key financial highlights from today on slide four. I'm pleased to report from the results today, excuse me. Which help demonstrate again how the Customer First Plan continues to develop our business with a best on record first half sales performance, significantly improved profitability, and a balance sheet that continues to provide a strong foundation for our business. Firstly, our sales growth has been very strong, up 24.2%, aided by the mandated lockdowns in the previous period, but pleasingly now represents our best first half sales performance on record. This has been led by customers returning to our stores, including our key CBD stores. Our omni-channel offer remains strong and a key point of difference.
As with the market, we've seen a rebalance of sales to stores in FY 2023, given the impact of this channel in the prior period. Our online offer still is contributing 20% of total sales with a three-year CAGR of 31.5%. This is important as we know when combined with our MYER one program, provides a great synergy with our stores, which we will demonstrate later in this presentation. This growth has also translated to an even higher profit growth, with NPAT up over 100% on first half 2022 at AUD 55 million, our best in almost 10 years. We continue to strengthen our balance sheet with AUD 267 million in net cash, AUD 60 million up on first half 2022. We are pleased to announce we've declared a total fully franked dividend of AUD 0.08 per share.
Moving to slide five, I'll start to talk about the makeup of our first half record sales. You can see from the first chart that the first half group sales are up 24.2%. Again, a significant jump, but importantly reflecting a 17% increase on pre-COVID in first half 2020. Importantly, an increase in market share according to our Mastercard-based analysis, which has also increased by 28 basis points. As seen in the market, online has reduced in light of the rebalancing of customer traffic to stores. We are pleased we've continued to maintain a strong online contribution, now sitting at 20.3% of total sales, faring much better than most of our peers in the market and providing stronger omni-channel foundations.
You'll see in the second chart there's been a strong return to physical retail, obviously a rebalance from the lockdowns in previous year. Particularly pleasing was a significant return to growth in our CBD locations and in-store delivering sales up 37.3%. Importantly, even if we back out the impact of the lockdowns from the prior year, as shown on the graph on the far right, the comp growth in store shows a similar story with strong growth in both suburban stores and particularly our CBD stores, which still grew at 20% on a comp basis. Moving to slide six, I just wanna touch on our online presence, which continues to underpin our multi-channel capabilities. We have a strong omni-channel offer that has allowed us the ability to capture opportunities that pure plays simply cannot.
With strong growth in our store sales post-lockdown, the return to CBD growth and a robust online business, providing synergies in both the digital and physical environments. While online continues to be a strength of our business, it is just one component of our omni-channel retail strategy. The bottom line is that consumers want to shop across multiple channels, not just online. In our view, the convenience of having both channels at our disposal has been demonstrated through the pandemic periods with the balance of high online growth during lockdowns. We have seen when out of lockdowns, a strong return to in-store, in-person shopping, and customer experiences within our stores. We know from looking at our data that our omni-channel customer is more valuable. They spend more per customer, are more engaged, shopping more frequently, more engaged with our brands, and more loyal than our single-channel customers.
The ability to have online and in-store is complementary. We have an increasing number of customers electing to click and collect their online purchases. Interestingly, almost two-thirds of our customers visit our website before they come in store. Vice versa, we have almost a third who purchase online indicating they went into a store prior to making the final purchase online. This is a great point of difference that we have as a multi-channel retailer and a key focus of our Customer First Plan. Moving to slide seven, our MYER one loyalty continues to drive our growth story and deliver an unmatched retail customer loyalty proposition.
The role of first-party data is incredibly important in today's marketplace, and we have reaped the benefits from our MYER one program, with over 73.5% of all purchases using a MYER one card, our highest on record since public listing in 2009. The program now stands at 7 million digitally contactable members, which is up 11.4% year-on-year, making it one of Australia's largest retail loyalty programs. Importantly, one of the key areas when we assess the power of our loyalty program is not the top-line number, but the number of customers who are engaged with us, meaning those who have spent in the last 12 months. This represents 4.1 million unique active customers, up 17.4% year-on-year.
We have been actively building engagement and acquisition, with 402,000 new members signed up in the first half alone. This is a 36.1% increase from last year. Pleasingly, we are continuing to see a significant shift to the younger demographic engaging with and using MYER one. Our loyalty program is one of the most rewarding in the market, and our MYER one customer spends 82% more than a non-MYER one customer. We believe it is a compelling proposition that will continue to underpin growth for our business as we leverage better insights to inform our business decisions and deliver greater insight and support for our brand partners, providing a strong and actionable database to commercialize further and to create deeper the connection with our most loyal customers.
Moving to slide eight, I want to touch on how we're delivering across multiple sales growth, which has led to the best first half profit results since first half 2014. We have had a relentless focus on profitable sales over the last number of years, and this has seen significant momentum across the bottom line, particularly when we don't have impact from lockdowns. The first half has only delivered strong sales growth in both stores and online channels. It translated to our strongest first half impact since first half 2014. We are pleased by the strength of our multi-channel capability with physical stores, including CBD stores rebounding, and our online channel, which is continuing to complement store network, giving customers real choice.
The quality and sustainability of the results have given the board confidence to declare a total first half dividend of AUD 0.08, which is a half year interim dividend of AUD 0.04 and a special dividend of AUD 0.04, all fully franked. Go to slide nine. Now let's talk about how we're building a more resilient and balanced business. While we are pleased with the quantum and trajectory of earnings, it's the quality of the earnings also that are important to us. Over the last four years, the Customer First Plan has yielded significant improvements to all aspects of the Myer business, including making it a far more resilient and balanced organization.
We are building strong customer value and loyalty through MYER one, but also leveraging the power of our wider Points Plus Pay partnerships that offer new customer growth, revenue, and more value to customers at a time when they need it most. To the second chart, top right, we are becoming less reliant on the Christmas trading day peak, improving the spread across the calendar year through greater frequency of customer events, and also capitalizing on the popular Black Friday sale period. Our merchandising improvements are paying significant dividends, both in terms of customer trust, brand engagement, and financially, and with an ongoing focus on making the big brands even bigger. We are less reliant on seasonal fashion categories, have a good spread across all categories, and ensure greater value options for our customers through a comprehensive, good special value proposition across both style and price.
To the last graphic, we are continuing to provide customers with greater choice and being less reliant on CBD store locations with the increasing growth of online, and the resilience of our suburban store network. Importantly, there is further upside to come as CBD continues to see more footfall as workers and tourists spend more time in our major cities. Moving on to slide 10. Building on the previous slide, we've emerged from the pandemic strong on all our key metrics. The plan has yielded significant improvements in all aspects of our business. The output of that progress is tangible improvement in some of the key metrics shown on this page. Our online business is continuing to go from strength to strength with AUD 382 million in first half 2023 from AUD 168 million in first half 2020.
We continue to strategically reduce floor space with good sense and a reduced space by 8.8% since first half 2020. We have reworked our merchandise strategy, with these improvements paying significant dividends, both in terms of customer trust, brand engagement, and financially, and through significant reduction in clearance of aged inventory. Since first half 2020, we've had a 490 basis point decrease in the percentage of clearance inventory. Customer satisfaction is up 11% on the year from first half 20 to 81% with Myer remaining Australia's favorite department store and the sixth most trusted brand in Australia by Roy Morgan. Our CODB as a percentage to sales are lower than pre-COVID.
At the bottom line, we have generated our strongest net profit since first half 2014. Net cash is up to AUD 267 million from AUD 103 million in first half lately. We have given ourselves balance sheet flexibility to continue paying the dividends. I'll now hand over to Nigel to go over the financial results in more detail.
Thanks, John. Good morning, everybody. Moving to slide 12, which is the summary P&L. As John has mentioned, this is an encouraging set of results reflecting first half of trade that was absent of any real disruption from COVID or other significant events. The reason why I use the term encouraging is that we still see opportunity to further improve from here, and we'll talk in a number of those areas as we go through the presentation today. Our total sales, including concession sales, were up 24.2% over 1H 2022 to just under AUD 1.9 billion. As a reminder, the first half last year, so 1H 2022, was impacted in the first quarter by mandated store closures on the eastern seaboard, and then again by people self-isolating due to Omicron in the December-January period.
While some revenue growth should have been expected. Comp sales, however, which under our definition removes periods where the stores are closed, but includes a decline in group online sales of nearly 10%, we're still up 4.5% on the prior corresponding period. When we compare this half's sales against periods pre-COVID, we are up 17% against 1H 2020 and 13% against 1H 2019. On the right of the slide, you can see our sales mix by source. This has stayed relatively static since pre-COVID, with Myer Exclusive Brands in the 17%-18% range, and then small fluctuations of 100-150 basis points between national brands and concessions.
Operating gross profit or OGP was up AUD 101 million or 17.4% on the prior year, which is a lower growth rate than sales, but still healthy. We'll cover the main reasons behind the lower growth rate on the next slide. Cost of doing business were up in line with the OGP growth at 17.9% in percentage terms, but by a much lower dollar amount of AUD 67 million. EBITDA was up 16.4% to just over AUD 240 million. Depreciation was down from both lower D&A on CapEx, reflecting the lower spend over the last two to three years, and also lower depreciation of the lease right of use asset, primarily from the relocation of our stores at office. EBIT is up 44.4% to just under AUD 140 million.
Pleasingly, we have no stores that are EBIT negative for this half-year based on the old to less AASB 16 accounting standard. Interest is down. This is again from a mixture of both lower interest on debt, where the prior year included the write-off of capitalized borrowing costs from our old facility of AUD 2.4 million, but also from the lower lease interest. There were no one-off implementation costs or individual significant items in either this half-year or the prior corresponding half. Bottom line, NPAT was AUD 65 million, which is up just over 100% from the prior corresponding half. Going into slide 13 and OGP. As you can see from the chart, whilst OGP in dollar terms has increased by AUD 101 million, our OGP margin in this period has fallen by over 200 basis points.
There are a number of factors that have affected this outcome, and the biggest callout are as follows. FX. A half-on-half movement in FX had an adverse impact of circa AUD 6 million. The average U.S. dollar hedge rate utilized during the period was $0.70. Moving forward with about 75% of our anticipated U.S. dollar purchases hedged in hedge two at an average rate of $0.68. Secondly, shrinkage. Shrinkage was again high and deteriorated by nearly AUD 12 million over the prior corresponding period. Shrinkage for this period was 1.7% of wholesale sales compared to 1.1% for the corresponding period and is now at its highest over the last five years.
In response, we've bolstered our loss prevention team and are continuing to implement technology and programs to address this issue, which is not isolated to Myer, but we believe can be significantly addressed over time, presenting an opportunity for us with the right investment. Third, promotional discount. Whilst we had a pretty strong sell-through across all categories, one area that we were a little overambitious on was home and entertainment. This is a category that's seen very strong growth over the last couple of years, but we did need some additional promotional support in this half to move the inventory through and achieve the strong inventory result for the half. Next, D.C. and freight costs. Whilst international freight costs are normalizing downwards, these were higher in the current period, reflecting higher volumes to be moved and with logistic costs increasing from higher wharf charges and local drayage rates.
Lastly, MYER one. As tag rates improve and sales improve, reflecting the improvements to range and shopping experience and stickiness of our customer base, so too does the cost of our MYER one loyalty program. Just, in terms of normalization, if we were to normalize the outcome for just the FX and higher shrinkage that we incurred, then our OGP margin would have been nearly 100 basis points higher than what we've reported today. We continue to believe there's upside potential in most, if not all, of these areas which we're working through at the moment. For example, if we can return shrinkage rates back to where they were just a year ago, we can add around AUD 8 million, less any OpEx investment to the bottom line. Moving to slide 14 and Costs of Doing Business.
As you can see, CODB is up AUD 67 million on the prior corresponding period, which is significantly less than the AUD 101 million increase in OGP. CODB as a percentage of sales declined 126 basis points from last half year, and is down over 200 basis points from the pre-COVID 1H 2020. On the right, we've shown the principal areas of growth in CODB, being as follows. 1Q22, as we mentioned earlier, the first quarter of the prior corresponding period was heavily impacted by store closures. We have then estimated the effect on CODB to the prior first half had we been open. With the principal effects being in-store wages and rent, which would have been higher, offset in part by an estimate of lower online variable costs.
Whilst this is an estimate, we think it illustrates the impact on costs of trading without disruptions in one page 2023. Secondly, wages and incentive increases. Wage increases of close to 5% apply to all of our staff on EBAs from the July 1st, 2022. Salaried staff were given a 3.4% pay increase from the April 1st, 2022, which was the first broad-based increase given in several years. Higher expected incentive payments under the short-term incentive and long-term incentive plans have also been provided for based on the improving performance. Higher operational costs. Operational costs, excluding the Q1 normalization and wage increases were higher, which largely reflected additional costs to support the revenue increase. Costs to support the online business were proportionally higher, particularly in fulfillment costs, as we awaited a rollout to our national distribution center.
Finally, support office costs. These were predominantly in the form of additional IT costs for licenses and cloud services, as well as some project topics to support the volume of projects we have going at the moment. Marketing expenditure to support the higher sales and an investment in our merchandise team. We continue to review our cost profile and believe there are opportunities to reduce the cost base further as we continue to execute space productivity improvements and technology investments in store, implement improvements to fulfillment and supply chain, including the NDC, and refresh technology in the support office. Onto cash flow on slide 15. Operating cash flow before interest in tech was up 18% on last half-year, mainly reflecting higher EBITDA generated, but also some improvement in working capital from tightly controlled inventory.
Income tax paid was of course much higher, reflecting the improved profitability of the business and the lag effect of that working its way into our tax installments. Cash CapEx was up strongly as we continued the controlled ramp-up of investment post-COVID. As a reminder, we've a number of large projects in train at the moment, including the NDC, which will run state-of-the-art robotics, a new point-of-sale system throughout the store network with hardware partially deployed already and software almost complete, with trials to commence in-store later this month or early next month, and also new back-of-house devices for the stores, replacing end-of-life devices across the network. These are in addition to refurbishments and upgrades, primarily at Eastlands, Perth, Toowoomba, Marion, and Chermside in the period and brand relocation and relayering activities in progress, as well as our ongoing investment in myer.com.au.
In terms of the full year, our expectations are that net cash CapEx will land somewhere between AUD 75 million and AUD 85 million. Go into the balance sheet on slide 16. As you can see from the balance sheet, despite having much higher intake to support higher sales than the prior corresponding period, we finished the half year with almost identical inventory levels, reflecting the much improved sell-throughs during the Black Friday to Christmas period and the stronger year-on-year sales during the Stocktake Sale period. The quality of the inventory continues to be strong, which is 16.7% of inventory older than six months. These are predominantly in cosmetics and other core lines where aging is less important. Whilst clearance inventory is marginally higher than the same time last year and will get dealt with through our quick cycles.
The only other real movement of note is our net cash position, which is up AUD 50 million from this time last year and up AUD 80 million since the end of last financial year, despite higher cash outflows than the prior corresponding period for CapEx, tax, and dividends. Over in slide 17 on liquidity. Just a couple of points on this slide. On the top chart, you can see our progress in stabilizing the balance sheet from the pre-COVID, 1H 2019 period to today. Secondly, the lines in the bottom chart depict net cash across 1H 2023 and the prior period, 1H 2022.
1H 2023 is depicted by the orange line, and you can see it has not dropped below 0 for the entire half year, which is the first time that this has been achieved since relisting in November 2009. Again, this is despite the higher cash outflows from CapEx, tax, and dividends in the half. The balance sheet recovery and continued improvements in net debt have obviously been key considerations for the board and its assessment of dividend capacity. Finally, our ABL facility, which was put in place just over a year ago, is operating as intended and continues to provide fit for purpose support for the business. In summary, this is a good result, and as I said up front, we're encouraged by it, but believe we can do better. On that note, I'll now hand you back to John.
Thanks. Excuse me. Thank you, Nigel. Now moving to slide 19. We believe the Customer First Plan progress that's been made means the company is well placed to drive significant value creation for the shareholders. Our plan continues to deliver strong outcomes for our business and shareholders. These include large-scale online business now representing 20.3% of total sales with platform to leverage omni-channel synergies. We've re-envisioned our supply chain with the introduction of the NDC opening later this year. The NDC will underpin growth and provide more effective online fulfillment when it becomes operational in the coming months. Ongoing improvements to the customer experience, both in-store and online, new events and upgraded customer experiences supported by our store relayering and refurbishment program.
A very healthy inventory profile, improved stock turn, making the big brands bigger and turbocharging key categories, and also the introduction of many new brands to future-strengthen our proposition. As always, we continue to focus on the delivery of reduction in space and improved productivity of back floor space. We'll build on this through our key strengths, ensuring a strong value proposition through our MYER one program with greater rewards, ensuring customers choose Myer over our competitors. Our omni-channel offering means customers can shop anywhere, anytime. Finally, the strength of our balance sheet allows continued investment and execution of our plan, which all team members remain focused on. The delivery of this program continues to underpin the future growth of the business and allow us to further unlock greater shareholder value.
As we move to slide 20, let's talk about the return of the Country Road Group of brands to Myer. This recent announcement signifies the trust Myer has built within the retail industry to deliver solid outcomes for its brand partners. The return of the Country Road Group is a clear indication of Myer's attractive proposition of creating and fostering strong, long-term strategic brand partnerships, which will provide significant positive impact to our business in the coming years. When Country Road and Myer parted company in FY 2019, it was a business representing approximately AUD 70 million in sales with what was a significantly smaller offer. What we've announced recently includes Country Road Kids, Home, Witchery or Trenery.
At Trenery, we are confident that with a larger, deeper offer, we will capture sales quickly, leveraging the power of our MYER one program, which indicated that 85% of MYER one customers purchased Country Road in 2018. They are still active today. As we said at the time, the rollout will be phased with Witchery, Politix and Mimco already launched in stores since February 2023. Country Road Women's, Men's, Kids, Home, and Trenery will be ranged from July 2023, and we are rolling out 37,037 days with some of the brands already online. Amazingly, we've already had a very positive response from our customers, both in store and online.
We continue to strengthen our merchandise offer across all fronts, including growing the brands that customers love across home, fashion, intimates, and our beauty portfolios with an ongoing focus on making the big brands even bigger. This has seen the launch of Simone Pérèle, Indois, American Eagle, Theory, and Thrills and Oroton . There is more to come. Moving to slide 21, I just wanna discuss how our MYER one Rewards and Pay with Points program uniquely positions us to deliver more value for our customers. Further to the strength we have been building in MYER one, we've been expanding partnerships and deeper strategic relationships with recognizable brands that command large rewards and benefits, including CommBank, Virgin's Velocity frequent flyer program, and also our newly recruited American Express partnership.
Maximizing these partnerships are, and continue to be important, as they provide a new source of customer growth, significant revenue streams both in-store and online, plus another opportunity to build loyalty. Our Points Plus Pay program is now one of the most significant in Australia. The combined reach of these programs covers approximately 35 million members and provides significant and direct link for customers to use their points directly with Myer. We also know that programs like these are becoming increasingly important. Over 50% of Australians said they will look to leverage their rewards programs in the next 12 months as cost of living expenses rise. These partnerships uniquely position Myer as a leader in this space.
Coupled with the accelerating strength of MYER one, it's just another way we're ensuring we have a stronger and more resilient business that equally provides greater value for our customers at a time when they need it most. Moving to slide 22, I'd like to talk about another area where we're continuing to invest in our stores and importantly, our people. We're continuing to ensure our team members have the technology they need to service our customers and provide the best experience. As part of this, we're continuing our store technology transformation journey, delivering new points of sale and software to all stores by October 2023.
We'll also complete the rollout of over 3,750 Zebra mobile devices, which allow team members to conduct activities such as receiving and dispatch, Stocktake, online fulfillment, inventory inquiry, and pricing, significantly enhancing team member experience and delivering multiple efficiencies. Our innovative in-house and My Team Member App provides real-time digital communication, product knowledge, and performance recognition, which is delivered directly to our team members' devices. The app displays all customer feedback and provides a wide range of learning moments, including video content. In addition to this, we have a number of team development programs underway across the business with monthly leadership essentials workshops and leadership pit stops, developing leaders and capability across our store network, and as well as the well-known Myer Graduate Development Program, supporting professional development of our future leaders.
In addition to reducing space across our store network, which stands at 11.1% since first half 2018, we're also making targeted strategic improvements to stores with refurbishments at Eastlands, Tea Tree Plaza, Marion, and Mount Gravatt, and 15 stores have relayering work underway. As part of this, we're also upgrading facilities management infrastructure at selected stores. It's through work and initiatives like this that we are seeing sales productivity up more than 16% versus 2020. We move on to slide 24. We conclude, we just want to provide some context on current trade. We've seen record sales in the first half, we look at current trade for the first eight weeks of this business, we still remain strong at +16%.
This result no doubt recognizes the growth of an Omicron-affected period the year before, but also demonstrates we're performing well against our peers. Whilst we believe there is uncertainty in the economic outlook, we believe we are well placed to meet market volatility and remain focused on profitable sales growth, a disciplined management of inventory and cost, and a prudent approach to investing in our future capability and partnerships. In conclusion, on slide 25, we continue to deliver against our plan. The brand has delivered strong sales growth, up 24.2%, with both stores and online performing well. Our online channel continues to be a strength and asset to the business and provides us with future value opportunities. We have delivered strong profit growth of over 100% over H1 2022. The strength of our balance sheet with considerable cash and more flexible financing facility.
We will continue to aggressively reduce space with more than 11.1% reduction from our store network since the start of this plan. There's more than a 7% in the pipeline to come. This result and confidence in our plan has given us the ability to continue paying a dividend. Like all retailers, we remain cautious about the macroeconomic environment. However, we are pleased with the momentum we are generating through the Customer First Plan and have a very strong pipeline of initiatives to come, which will ensure we are well placed for the future. We believe we have the right value-based proposition of affordable, aspirational, and leading brands. We have a strong multi-channel offer and an improving PBD store network.
We will provide deeper customer value through our loyalty program and partnerships that will underpin the value for our business and for our customers. Finally, I want to thank all our shareholders, our team members, brand partners and suppliers, and above all, our customers who build their loyalty to this great business. Thank you. We'll now open up for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're honestly concerned, please pick up a handset to ask your question. Your first question comes from Mark Wade from CLSA. Please go ahead.
Good morning, John, Nigel. Great results. Well done. Just a couple of comments you had about the increased spending at home entertainment. Like Myer's got a really good customer base, and I was curious to see if you've, if you've noticed any pronounced differences by product or geography that could provide some pertinent clues on the behavioral and general health of the consumer.
Not really, Mark. You know, as I said in sort of my commentary, we, you know, we've experienced really strong growth in that category and, in a way, we were targeting, you know, that to continue, and which it has to some degree, but just to a lesser degree than what we'd predicted. We'd probably just catered for, you know, a little bit stronger growth than what we'd than what we'd physically achieved and therefore needed to move the inventory through.
Okay. Fair enough. Can you comment on the store, the pool and performance of the CBD and non-CBD stores? You said in there that CBD sales are up over 2%, which is great. How does that compare pre-COVID? I'm really just trying to get a sense of is this a meaningful opportunity as I guess as people pull their balances to track against and does it come at the expense of other stores?
Yes. Sure, Mark. It's still down on pre-COVID. Therefore, we think there's significant upside in CBD performance, as I said in the presentation, as work has come back to offices and we see international tourists come back and domestic tourism as well. We're very encouraged by the current performance. We know there's a lot of traffic in the CBD, particularly at the weekends. Melbourne bouncing back nicely. Sydney was sort of stronger during the week. We still think there's significant upside there, absolutely.
Lastly, with the business, I guess it was a necessary evil. It was run on a, you know, an all era for a long time. Rolling through today, you've got, again, great sales results and profitability coming out of that sort of network, and the sheet's better. Does it make sense to now really conduct more refurbs with staffing levels just to really kind of reinforce the brand?
Actually, we've been doing that over the last five years. there's more people in stores today than there ever has been. We've touched every single store in the network. The major refurbs, if you look in the deck, you'll see that we've got significant landlord contributions as well. Bear in mind that we can only really work in shops 8 months of the year because you've got key trade periods on four other months. You do not want to be causing disruption in there. The key thing for us is productivity. If you look all of those stores that we've downsized or reduced floors, the productivity is significantly improved. I think if you look at the numbers, I think it was 16% on first half 2020.
For us, it's all about targeted strategic investment. As we've said, we want profitable sales growth, but also we'll manage cash and costs. In terms of CapEx, you know, if you gave me another AUD 500 million today, we wouldn't spend any more than we're spending now because we physically couldn't get everything done. It's also about return. You know, I'm not gonna spend money on a store unless we change the customer experience. Just replacing a carpet or a, or some new tiling or new toilets, you have to bring the customer on the journey and improve what is in that shop. That's what we've focused on. We make sure we have, you know, we have hurdle rates must be achieved at every single investment that we make.
I'll leave it at that. Thanks, John. Thanks, Nigel.
Thanks.
Thank you. Your next question comes from Johannes Faul from Morningstar. Please go ahead.
Hi, John. Hi, Nigel. Thanks for taking my question.
Yeah.
I had a question on trading in February and just what you've seen there. The numbers imply that the momentum has slowed. Can you perhaps give a bit more color on how sales are going? If you have seen within your store, you know, good, better, best, has there been trading down yet? How are, you know, the different categories that are weakened?
Look, it's a particularly difficult question to answer because January compares to an Omicron affected January last year, as John said in his discussion. February is actually not a great month to actually focus on in any event because it is seasonally one of the lowest/weakest trading months for retail generally throughout the country. We haven't seen downward trading at this point. But, you know, it's still sort of robust, and we're not seeing any particular sort of, you know, impact on trade. You know, we continue to be cautious. But February's sort of a month that's relatively inelastic in terms of us putting promotions and things like that in terms of our ability to move the customer to purchase more.
Okay. Great. Thanks. Then just a question on costs and how to think about costs going forward. On the rents, how are they generally escalated for those that you still have? Is it CPI or is it linked to sales?
Sorry, could you just say that again? I just missed.
Yeah, sure. Just on rent, do they pick up, do they lead in any way to inflation or?
We've got a handful. Yeah. We've just got a handful of any sort of form of CPI inflators. The rest do periodic market resets. Yeah, it's restricted to kind of, you know, half a dozen or something like that.
Should we expect rents to go up more than they have in the past? Maybe a second question on the cost piece. You mentioned wages were up 5%, salaries also up 3.4%. I mean, what are you budgeting for going forward?
Rents, you know, we expect that, you know, we'll continue to have robust discussions with our landlords on rent. You know, other than the CPI inflators which we sort of wouldn't expect a significant increase into next year. Whenever we do a refurbishment and downsizing, we actually look to take proportional rent out of those discussions. You know, there's still opportunity, and we've got a strong pipeline of square meterage under discussion that would result in rental decreases in pure dollar terms. That's where we are on rent. I don't wanna predict sort of on the payroll side. I mean, we'll see what comes through in terms of a national sort of wage increase and, you know, that will apply accordingly across our EBAs.
I don't wanna sort of predict where that goes, but we'll have a disciplined approach to our CODB. You know, there are a number of other things in there like, you know, a pure pay increase also then stimulates sort of higher payroll tax and those types of things. You know, 0.5% additional increase superannuation guarantee levy contributed to that increase in wages that we saw last year.
All right. That's fair. Thanks. Maybe just lastly, just touching on the CapEx piece, just once more. So guidance was AUD 75-AUD 85 for the full year. Is that right?
Yep. That's correct, yeah.
How do we think about it going forward? I mean, obviously, yeah, I get like, you know, the ROI has to be there to spend. Just as % of sales or even as an absolute figure, how should we think about CapEx going forward?
Look, in all particular it's obviously from year to year, but, you know, as a broad sort of guidance, I'd expect it to be between 70 and 90-
Yeah.
on an annual basis.
Okay. Thanks, everyone.
Cheers, man. Appreciate that.
Thank you. There are no further questions at this time. I'll hand back to Mr. King for closing remarks.
Thank you for joining us today. We look forward to catching up with you individually over the next couple of days and have a good day. Thank you for listening.
That is concludes our conference for today. Thank you for participating. You may now disconnect.