For the first time in four years, Myer has reinstated its dividends following a return to growth and profitability in the first half of FY22, demonstrating 'confidence' in the business' growth momentum, a return to sales growth in the first five weeks of Q2 and 'supercharged' online growth.
The department store reported an 8.5 percent increase in total sales ($1.5 billion), with comparable sales growth of 17.8 percent. Its operating net profit has also increased by 7.8 percent to $582.2 million, with a margin decrease of 24 basis points to 38.4 percent – this reflects the COVID-related supply chain costs and ongoing promotional activity.
Its NPAT is $32.2 million, 55.2 percent higher than the prior year, adjusted for JobKeeper. Its net cash is also up $16 million, now at $217 million.
Myer has further reported ‘supercharged’ growth in online channels, which has become the shining star for the business. Group online sales have grown by 47.5 percent to $424.1 million, representing 27.9 percent of total sales. The team at Myer have stated a goal of reaching $1 billion in annual sales, which they believe they can achieve in the near term. Moreover, the team at Myer expressed that the growth the business is recording is ‘significantly outpacing’ its competitors, including multichannel and pureplay retailers.”Our online business has grown nearly fourfold in the past four years and is now one of the biggest online retail businesses in the country,” shared John King, CEO of Myer.
Myer delivered 17.1 percent growth on pcp for the two months ending 1 January 2022 (when not affected by lockdowns) in the lead up to Christmas. “The half-year results we have announced today demonstrate the strength and resilience of the business providing continued momentum for future growth,” said King. “The combination of our online platform and store network performed well in navigating the challenges faced during the period, including disruptions caused by government-mandated lockdowns to mid-October, the emergence of Omicron in late December, and the mitigation of major supply chain disruption and staffing availability in early 2022.”
As King stated, the lockdown measures in states across Australia in 2021 has affected a quarter of stores across the country, resulting in a loss of 2,400 trading days (or 23 percent). “We have delivered first-half sales growth of 8.5 percent in challenging trading conditions in terms of both store closures and the impact of Omicron in January with very strong growth in the lead up to Christmas when not affected by lockdowns,” he continued.
John King, CEO of Myer.
The lockdown measures have also significantly impacted the retailer’s seasonal inventory, which was described as being in an ‘abnormally low position’ in 1H21, resulted in potentially missed sales, have since returned to a ‘healthy’ level. As such, the business is ‘not concerned’ about a slightly higher inventory level in January, as the business reported a sales rebound in February. Other impacts from the lockdowns in 2021 included the increase of supply chain costs, which impacted margin costs on the Myer brands.
Looking forward, Myer will continue to invest in its Customer First Plan, which was implemented in 2018. This includes the ongoing investment in its online channels and fulfilment. “We are sharply focused on our plans for the future built on the key growth drivers of online sales, the value of our MYER one program and the delivery of our Customer First Plan – all of which are geared to creating improved value for shareholders,” King said.
In the first five weeks of Q2, Myer has reported department store sales increase by 15.2 percent, with stores up 9.3 percent and online growing by 48.6 percent. “Despite the initial impact of Omicron in early January, we have returned to a growth trajectory – delivering 15.2 percent sales growth in the first five weeks of trade in the second half across both stores and online,” King explained.
Following the announcement of the results, Myer’s shares are back in the green, increasing 22.4 percent since opening, now at $0.50 a share.
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