Continuing with the presentation this morning via the phone...

Continuing with the presentation this morning via the phone call, MYR said that the CBD store closure for two months in Melbourne had seen sales drop - (In Victoria or just Melbourne, I couldn't quite take it down in time?) - by 49 per cent.

It was not practical to move swathes of stock interstate given the high cost, and for a time staff were not allowed by the Victorian Premier to come in and move stock: not a 'permitted activity'.

Mr King said from the MYR corporate office in Docklands, Melbourne, he was looking across at 'empty' ANZ and NAB head offices.(That's not quite right, as from personal experience travelling on Metro Trains and Yarra Trams in Melbourne during weekday peak periods, more are constantly returning to work, although obviously still below pre-COVID-19 . The banks have some staff back at CBD desks as I understand it).

He said CBD store sales in Melbourne and Sydney had been down as much as 50 to 60 per cent, but were now down about 30 per cent.

The Adelaide store was 'positive' (i.e. profitable),

PER was about to achieve that and Brisbane 'was a bit off.'

He said that given at this time last year, COVID-19 was commencing (from my memory, 23 March was one of the worst days when much negativity occurred such as aircraft being mothballed), shopper behaviour had then switched quickly to online so now (March 2021), it didn't expect on a comparable basis a big uplift in online sales.

Suburban and rural city stores were doing OK.He pointed out that there was not much interstate tourism, there was an 'ongoing threat of further lockdowns' (and he could have added 'border closures' - "thanks" Daniel Andrews (Vic), Annastacia Palaszczuk (Qld) and electioneering Mark McGowan (WA) for destroying our freedoms) and in Melbourne, only one in seven international students had returned in person to universities. Plus, of course, no inbound tourism from overseas.

All these factors are adversely affecting the Melbourne and Sydney CBD stores that for MYR normally account for 20 per cent of revenue.

As CBDs bounce back, wage costs will rise but that to me is a positive as it will do so in line with sales rising.

As noted in the presentation slides, momentum to receive rent reductions from landlords was interrupted a bit by the peak pre-Christmas trading period but discussions are now gradually ramping up again..

MYR acknowledged that in previous years it had faced shopper criticism that 'there was no one to serve me' or 'staff were chatting amongst themselves, not serving me' so it wants to avoid that recurring.

MYR is confident about receiving stock from overseas, pointing out that the apparel brand Tommy H's 49 per cent rise in sales in 1H 21 was when stock had to come from Europe and elsewhere. There have however been a few 'minor delays'.

Annual capital expenditure in an FY is normally $65-75m but in 1H 21 was only $14m. It should come in at $40-50m for the full FY. Some stores need minor spruce ups that will occur if cost effective, while there will be further attention paid to its already very good online presence. In FY22, capex may rise to $75m (no further detail on that).

Merchandising team expenses were down $3m but this largely reflects a lack of buying trips. I'm unsure why they couldn't try to obtain exemptions from Australia's Border Force to go overseas.

Overall, while to some extent MYR's future is in the hands of the two business-unfriendly, lockdowm and border closure-happy Premiers in Victoria and Queensland plus the one over in WA (thank God for Ms Berejiklian in NSW!), it came across to me that MYR is improving despite huge headwinds largely out of its control.