Myer Bounce Back To $38M Half-Year Profit
Embattled department store giant, Myer, has rebounded into the black, following a $38.4 million half-year profit – up from a whopping $476 million loss in the year-ago period.
Shares soared 17% to 48 cents shortly after market open.
“This result demonstrates the positive customer response to a number of initiatives from our Customer First Plan, particularly during the all-important Christmas and Myer sale periods,” asserts Chief Executive, John King.
The retailer has warned of sales pressure in the next six months, citing declining house prices and uncertainty over the federal election.
Despite this, Myer affirms continued investment in operations and new brands will drive earnings.
For the six months ending January 26, total sales slipped 2.8% to $1.67 billion, with like-for-like sales dipping 2.3%.
Management did not declare an interim dividend.
Trading performance claims to have improved in Q2, especially around the key trading weeks towards Christmas.
Q2 comparable store sales notched -0.9%, stabilised by strong online growth.
Online and omni-channel sales soared 18.6% to $151.2 million.
Operating cash flow lift to $173 million, with total net debt reducing $57 million.
Operating gross profit margin also jumped 99 basis points to 38.5%, with EBITDA climbing 4.9% to $113.6 million.
A drop in the cost of doing business, coupled with strong private label sales saw EBIT lift 2.8% to $63.8 million, beating analyst expectations for $56 million.“The improved operating gross profit margin and continued disciplined cost management combined to more than offset higher depreciation and interest expense, resulting in an improved 1H2019 NPAT of $41.3 million,” affirms Mr King.
“The debt refinancing was completed in November 2018 and provides a stable platform for the next two years, with substantial headroom in all of our covenants”
“We remain focused on deleveraging and net debt was reduced by $57 million.”
Mr King – an ex-House of Fraser boss – asserts Myer is on “the right path” with the “right people in place”, adding “there remains a lot of work to be done.”
Concerning future outlook, second-half results will deepen Myer’s Customer First Plan, whilst further focusing on costs and profitability.
King warns sales may be pressurised by brand shuffling – exit and introduction – incurring additional associated costs.