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Year-on-year sales have dipped in the first six weeks of FY24 for department store group Myer Holdings (ASX: MYR) amid a continued deterioration of market conditions for the company that began to emerge in the June half.
While Myer today posted an 18.2 per cent increase in net profit after tax to $71.1 million, the best since FY15 and in line with the forecast issued early last month, all eyes have turned to the retailer’s latest data to gauge the effects of falling consumer sentiment.
Myer’s full-year result was buoyed by a strong first half in FY23, which helped drive group sales 12.5 per cent higher to $3.36 billion – the highest sales figure since 2005.
But the 1.9 per cent drop in sales for the first six weeks of this financial year followed a tepid 0.4 per cent increase in sales over the second half of FY23 as customers tightened their purse strings throughout 2024.
The comparable sales decrease for the start of the current financial year comprises department store sales only and takes into account stores that were closed in the prior period due to lockdowns. It also extracts the impact from significant store closures during the year - namely Frankston in Melbourne and the Myer Centre in Brisbane’s CBD.
According to Myer, the sales rebound in FY23 reflects the scale of the online business which at $691 million accounted for 20.5 per cent of the year's total sales.
Myer CEO John King, who is set to retire next year after leading a turnaround of the group over the past five years, has expressed a combination of optimism and caution for the year ahead.
“Like all retailers, we continue to remain cautious about the macroeconomic environment,” King says.
“However, we are pleased with our strong results at the half and the full year and have a strong program of deliverables to roll out in FY24 as part of our Customer First Plan.”
King says that in line with Myer's trading update issued on 8 August, he was happy with the FY23 result which reflects continued profitability and a strong balance sheet despite softening market conditions.
“Our multi-channel offer is a key strength of these results as we capitalised on customers returning to stores after closures in the prior year, underpinned by our leading customer loyalty proposition in MYER one.
“Our online offer is a scale business that returned to growth in the second half and has continued to increase market share throughout FY23.
“The strength of our balance sheet and cash management has seen us continue to invest strategically in our store formats, technology and our merchandise offering, including the progressive rollout of new and expanded brands like the Country Road Group, American Eagle and many more.”
Myer forked out $86 million in dividends during FY23, which King says ‘demonstrates the confidence in the plan and the Myer business’.
Myer posted a statutory net profit after tax of $60.4 million for FY23, which includes significant Items of $10.7 million from the closure of the Altona and Richlands Distribution Centres, and the company’s high-profile exit from Brisbane’s Myer Centre earlier this year.
Myer is paying a fully franked final dividend of 1c per share, bringing total dividends for FY23 to 9c – a figure that included a 4c interim special dividend. This is up from a payout of 4c per share in FY22.
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