Myer pays final dividend after strong start to 2023
Department store sales rose 74.8% in the first six weeks of the new fiscal year – sales at the same time last year were hit by COVID-19 closures – and rose 21.8 % compared to pre-pandemic levels.
Mr King expects strong Christmas trading, but said he was concerned about the state of consumer confidence – especially if the Reserve Bank were to raise rates again on October 4.
“We are concerned about what can happen to the consumer, but we have built a business that has agility and flexibility because we are not dependent on one type of product or one type of category,” said he declared.
“We are able to adapt the activity according to what the client is doing. We are cautious, but we are convinced that what we offer to the consumer is an excellent value proposition.
Despite pressure on households from rising mortgage rates and energy bills, buyers continued to spend. Myer’s strong fiscal 2022 results mirror those of other retailers that reported results in August.
Underlying net profit rose 16.5% to $60.2 million for the year ended July 30, hitting the high of expectations. Its net profit rose 5.7% to $49 million after including restructuring costs, reduced floor space and asset write-downs.
Full-year sales rose 12.5% to $2.99 billion from $2.66 billion the year before, which included an additional week of sales. Same-store sales jumped 15% during the year. Excluding significant items, earnings before interest, amortization and tax impairment reached $400 million.
The board of directors has declared a final dividend of 2.5¢ per share to be paid on November 7. The department store chain, founded in Bendigo in 1900, has reinstated its dividend to half-year results – the first in four years.
Shares of Myer fell 1.3% to 63¢ on Thursday after rising ahead of the results.
Investors mutual fund manager Simon Conn was happy with the payout and said the market needs to revalue Myer given his strong performance and his online and data assets or “someone will take him out.” “.
Myer’s online revenue reached $722.8 million, up 34%, and accounts for about 24% of group sales.
Mr King called Myer’s loyalty program a “diamond in the rough” which he has no intention of selling. About 71% of sales come from the Myer One loyalty program, which has 6.6 million members. It also taps into a younger customer base, driven by new brands, Mr King said.
“We were looking for new and expanded partnerships to help leverage Myer One by leveraging these partnerships as they provide a new source of customer growth and significant revenue streams both in-store and online,” said Mr. King told analysts.
This week, Myer announced a new frequent flyer partner, Virgin Airline’s Velocity, joining CBA as a partner.
Chief Financial Officer Nigel Chadwick told analysts that gross operating profit margins were reduced in 2022 due to a further reduction in inventory at the end of the year and increased transport costs due to transporting its private labels to Australia.
Myer’s new robotic fulfillment center is expected to be fully operational in the June quarter and will benefit online retail by reducing fulfillment costs, which will help improve margins.
Mr Chadwick described Myer’s balance sheet as “rock solid”: Myer went from having net debt of more than $100 million for the whole of 2018 to positive net cash of $186 million dollars in 2022.
The South African owners of rival David Jones said in late August that the department store chain had also seen a rebound in sales and profits in recent months.
There has been a flurry of corporate activity in the department store arena with Goldman Sachs testing the waters with potential David Jones buyers.
Myer’s longtime suitor, Solomon Lew and his Premier Investments, increased his stake to around 23% of the company’s shares in early August. The veteran retailer is now seeking a seat on the board and has appointed Terry McCartney, who is a non-executive director of Premier.
Mr King said any shareholder with such a large stake deserved a seat on the board.
Some market watchers think Mr. Lew is happy to keep climbing up Myer’s stock book every six months until he vies for control. Others say that if Myer shareholders elect Mr. McCartney to Myer’s board, Mr. Lew could make a move for the company.
A week ago, another wealthy investor took a 1.2% stake in Myer, with the deal handled by boutique broker Aitken Mount Capital Partners.
Myer meanwhile bolstered his defense by naming Jefferies Australia.