MYER GROWS PROFIT AMID STRONG COMPETITION AND CONSUMER FATIGUE

MYER GROWS PROFIT AMID STRONG COMPETITION AND CONSUMER FATIGUE

MYER'S half-year sales announced today have been described as "encouraging" by CEO and MD, Richard Umbers, but the retailer's shares fell 5.26 per cent on the ASX.

The market was unimpressed by a 5.3 per cent growth in profit to $62.8 million, compared to the previous corresponding period, as the company's sales declined by 0.6 per cent to $1.78 billion.

Second quarter sales, taking in the important Christmas and New Year period, were down 1.3 per cent to $1.07 billion.

Additionally, the Melbourne-based company's operating gross margin declined by 41 basis points to 38.3 per cent, but EBITDA increased by 2.7 per cent to $142.2 million and EBITDA margin increased by 25 basis points to 8 per cent.

Myer CEO and MD, Richard Umbers, says, the key trading periods of Spring Racing and Christmas were encouraging, but were offset by subdued sales during the Stocktake Sale.

"The improved profit result was achieved against a backdrop of aggressive competition with heavy discounting both before and after Christmas and patchy consumer confidence," says Umbers.

Umbers puts the poor stocktake performance down to Myer's strategy of reducing markdown dependency and the emergence of widespread discount fatigue among consumers.

In a preview to the full-year figures, Myer says sales in January and February were below expectations with January being the low point.

Based on the expectation that those conditions do not return, Myer still anticipates EBITDA growth to exceed sales growth in FY2017 and increased NPAT (pre and post implementation costs) over FY2016.

The business is 18 months into its five-year New Myer transformation and Umbers believes the final result will be a stronger company.

"We have made significant progress on our focus to deliver wanted brands and enhance customer service, and this work continues," says Umbers.

As part of the process, Myer will develop an improved omni-channel offer and a "productivity step-change".

Myer will pay an interim dividend of 3 cents per share full franked. The company finished today's trading at $1.08 per share.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Crypto staking: a new way to earn passive income
Partner Content
You may be familiar with traditional ways of earning passive income such as trading sto...
Etoro
Advertisement

Related Stories

Board exodus gathers pace at The Star after O’Neill resigns as chairman

Board exodus gathers pace at The Star after O’Neill resigns as chairman

The Star Entertainment Group (ASX: SGR) is now on the hunt for a ne...

Blackstone waits on gaming authorities as Crown shareholders approve $8.9b buyout

Blackstone waits on gaming authorities as Crown shareholders approve $8.9b buyout

Shareholders of Crown Resorts (ASX: CWN) have voted in favour of th...

Carsales.com founders sell Melbourne office development for $60.25m

Carsales.com founders sell Melbourne office development for $60.25m

A Singapore-listed property trust managed by Frasers Property (SGX:...

Woolworths adds controlling stake in MyDeal to cart for $218 million

Woolworths adds controlling stake in MyDeal to cart for $218 million

Woolworths (ASX: WOW) is looking to enhance its online marketplace ...