Myer Shares Up 10% After Major Profit Lift
UPDATED: Shares in Myer have soared 11.40% after market open to 64 cents, following its first major profit lift in nine years.
Embattled Australian department store, Myer, has post its first underlying net profit jump in nine years, driven by private label sales, cost-cutting, and lower discounting.
Whilst the retailer lost $8 million in the second half, full-year bottomline profit notched $24.5 million versus a whopping $486 million loss in 2018.
The news contrasts rival luxury department store, David Jones, who recently announced a $437.4 million writedown of its value, remarking the Australian retail industry is in “recession.”
For the twelve months to July 31, Myer underlying net profit [before one-off costs] lift 2.2% to $33.19 million, trumping forecasts of $32.7 million.
Myer post $8.7 million in one-off costs for redundancy payments and more – down from $518.5 million in one-off costs last year.
The group has committed to ditch unprofitable product segments, prompting a 3.1% lift in EBIT to $58.5 million, with gross margin up 65 basis points to 38.85%.
Same store sales slipped 1.3%, excluding the impact of Apple which pulled out of Myer in May.
Online sales spiked 25.6% to $262.3 million.
Myer’s exclusive brands business jumped 1.9% to $527.2 million, complemented by the debut of over 50 new brands. The retail will continue to roll-out its ‘Only at Myer’ brand strategy.
The news follows the appointment of former House of Fraser boss, John King, in April last year.
The retailer has withheld paying out a final dividend.
“We have made progress working with landlords, through a portfolio partnership approach, to reduce our footprint and refurbish stores to transform the customer experience, while simultaneously delivering material cost savings,” claims Mr King.
Shares in Myer are around 57c, up from 36c in February.