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Myer reports mixed financial year results

PUBLISHED

2023-09-14

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Myer (ASX:MYR) met its early August guidance for its July 2022-23 financial year with solid earnings growth but experienced a weak start to 2023-24. Shareholders, however, will receive a final dividend of one cent per share, a significant decline from the 2.5 cents per share paid as the final dividend for 2021-22. Nevertheless, the full-year payout of 9 cents per share marked a more than twofold increase from the 4 cents per share paid in 2021-22, representing the highest payout since 2014.

Total sales increased by 12.5% to just over $3.3 billion, as guided in August. However, second-half sales grew by just 0.4% as consumers reduced spending and shifted their focus to essentials, although this was an improvement from the high 16% rise in the second half of the previous year.

Despite this, Myer reported that sales for July and August were down 1.9% compared to the previous year when sales rose sharply as COVID-19 lockdowns were being lifted, resulting in the strongest start to a new trading year since 2006. This slowdown, combined with a decrease in sales growth during the first weeks of 2023-24, led to a decline in Myer's share price from 71 cents to 61 cents after the August 8 update. On Thursday, the shares saw a modest 1.1% increase to 64 cents in early trading.

As outlined in the early August update, profit margins decreased due to the second-half slowdown, and group online sales fell by 4.5% to account for 20.5% of total sales, amounting to $690.5 million. Operating gross profit, on the other hand, grew by 6.9% to $1.224.6 billion, but the margin decreased by 189 basis points (bps) to 36.4%, primarily due to the adverse impact of higher shrinkage and foreign exchange movements. (Note: 'Shrinkage' refers to theft, including shoplifting and internal theft.)

Myer's net profit after tax of $71.1 million was the highest since the financial year 2015. Commenting on the results, Myer's CEO, John King, stated:

"In line with our trading update issued on 8 August 2023, we are pleased with the strength and quality of our full-year result. Despite a softer trading outcome in Q4 due to current economic conditions, we not only delivered our best full-year sales result since 2005 but also maintained profitability and a strong balance sheet. This provides a solid foundation to pursue our future plans and growth opportunities under our successful Customer First Plan. This year, we distributed $86 million in dividends to our shareholders, demonstrating confidence in the Plan and the Myer business."

Solomon Lew, a Melbourne retailer, will receive a 26% stake in the company.

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