JobKeeper, rent waivers help Myer deliver boost in profit

JobKeeper, rent waivers help Myer deliver boost in profit

Department store group Myer Holdings (ASX: MYR), bolstered by $50.7 million in JobKeeper payments, has posted a 76 per cent increase in interim profits to $43 million in the December half.

While the previous year's result was impacted by writedowns, the government wage subsidy helped keep the company in the black and fend off a sharp downturn in foot-traffic across its flagship CBD stores in Melbourne, Sydney and Brisbane which were hardest hit by lockdowns during the period.

Group revenue fell 13.1 per cent to $1.4 billion, but CBD sales took a 32 per cent hit with Myer blaming this on restricted CBD workforce levels, less tourism and subdued confidence from continued shutdowns.

However, suburban stores were up 6.3 per cent by comparison along with a solid increase in online sales compared with a year earlier.

Myer reported a 71 per cent increase in its online sales to $287.6 million over the previous year with beauty and homewares items showing the sharpest rises.

The company says this positions Myer as one of the largest and fastest growing online retailers in Australia.

Online sales growth did slow somewhat in the past six months, increasing by 13 per cent compared to the second half of FY20.

The company's online sales now represent 21 per cent of total sales, twice as much as a year earlier.

The digital sales mix is on par with Premier Investments (ASX: PMV) at 20.4 per cent, but well below Adairs (ASX: ADH) at 37.1 per cent.

Myer CEO John King has given an upbeat assessment of interim earnings performance.

"The first-half result reflects several positive achievements including the continued strength of our online business, as well as sustained disciplined management of costs, cash and inventory," King says.

"We have now delivered five consecutive halves of reduced operating costs which, combined with a significantly improved balance sheet, has ensured the company was able to withstand this challenging operating environment."

Myer was able to secure $18 million in rent and outgoings waivers during the period, some of which was attributed to CBD store closures in the second half of FY20.

The company says Myer received JobKeeper payments only during the first phase of the program, which allowed it to "keep considerable numbers of team members employed".

Myer is not paying an interim dividend.

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