Department store chain Myer
(ASX:MYR) delivered on Thursday what was arguably the best result from the retailing sector for the first half of the 2022-23 financial year.
Myer had given investors a big hint in its late January trading update which showed it was expecting a surge in sales and earnings for the six months to the end of January yesterday.
That update sent Myer shares surging in late January and Thursday’s confirmation did more of the same with the shares up more than 18% after the company said the strong sales growth had continued into the early weeks of the new financial year.
The update in January had confirmed earlier reports of the bounce back in CBD retailing after the Covid lockdowns ended and Thursday’s formal report revealed the extent of those record sales and earnings – and a nice fat interim dividend to the company’s shareholders.
Myer reported its best profit result in almost a decade, with CEO John King flagging there is more growth to come despite the rising inflation, costs and interest rates and sagging consumer spending and incomes.
King was upbeat about the sales outlook as he presented the retailer’s half-year results to analysts on Thursday morning, saying the combination of resilient bricks-and-mortar store sales and online demand puts the business in a strong position even in tougher trading conditions.
“We have a strong omni-channel offer which has allowed us the ability to capture the opportunities that [online] pure plays simply cannot,” King said. “There is further upside to come as CBD continues to see more footfall, as workers and tourists spend more time in the major cities.”
Myer’s net profit more than doubled to $65 million for the six months to the end of January, up from $32.7 million the year before.
Sales jumped 24.2% to a record $1.8 billion.
Earnings before interest, tax, depreciation and amortisation rose to $240.7 million for the half, compared to $206.8 million at the same time last year.
And an interim dividend of 4 cents per share will be paid, as well as a special dividend of 4 cents per share (which will use up some of the accumulated franking credits).
Sales at Myer’s CBD sites increased by 53.7% in the six months to January compared with the same time last year, when COVID lockdowns and people working-from-home affected trading.
When the impact of COVID restrictions is excluded, sales were up by 20%.
Myer’s online sales fell by nearly 10% for the half, but still accounted for $382.3 million of Myer’s overall sales, with online transactions up by 31.5% compared with three years ago.
The higher dividend will give significant payday to major shareholder and long-time critic of Myer’s, billionaire Solomon Lew, who will receive just under $17 million in dividends after boosting his stake in the company to almost 26% last week.
Myer shares reached $1.135 yesterday, which is a touch ironic because that was around the entry price for Lew for his first stake of 10.77% in March, 2017. He has averaged down with subsequent purchases so his company, Premier Investments, would be sitting on a nice paper profit.
Myer shares ended the day up more than 18.3% at $1.13.
That’s because investors also liked the confident outlook from the retailer. Myer told the market that “In the eight weeks post-Christmas, Department store sales are up 16.1% over the corresponding period in the prior year. “
John King said: “Like all retailers we remain cautious about the macro-economic environment, however, we are pleased with the momentum we are generating through the Customer First Plan and have a strong pipeline of initiatives still to come, which will ensure we are well placed for the future.”
That was a far more positive outlook from a key retailer than we saw from the likes of JB HiFi or Harvey Norman, Coles or Woolworths.
