The Myer Holdings Ltd (ASX: MYR) share price is down 11% after the retailer reported its FY24 result.
Myer is one of the largest department store retailers in Australia.
FY24 result
Here are some of the highlights from the 52 weeks to 27 July 2024:
- Total sales down 2.9% to $3.27 billion
- Online sales up 2% to $704 million
- Operating gross profit decreased 2.5% to $1.19 billion
- Underlying net profit after tax (NPAT) fell 26% to $52.6 million
- Statutory NPAT of $43.5 million
- Final dividend per share of 0.5 cents
- Full-year dividend of 3.5 cents per share
Myer said its sales decline reflected the closure of Brisbane, Frankston and Werribee stores for all or part of the year, as well as challenging economic conditions. Excluding that effect, comparable group sales grew by 0.4%.
The department store business said its cost of doing business (CODB) was $834.7 million, up 1.3%, but was broadly flat excluding a reclassification of delivery income. This increase “reflected the focus on mitigating cost increases, including the impact on CODB of the store closures.”
Myer attributed the decline in underlying NPAT to the impact of the store closures, challenging trading conditions, higher costs and the underperformance of sass & bide, Marcs and David Lawrence. I think this is the key measure hurting the Myer share price.
The statutory net profit includes implementation costs and individually significant items of $9.1 million, relating the impairment of store assets, and software implementation costs.
Management comments
The Myer Executive Chair Olivia Wirth said:
Today’s result reflects the challenging macroeconomic environment for Australian retailers.
Despite the tougher trading conditions, work undertaken by the Myer team in recent years has helped stabilise the business and established a foundation for future growth. With a highly engaged customer base, a leading loyalty program, positive comparable department store sales growth and high levels of trust in the Myer brand, there are significant opportunities for growth.
We are laser-focused on improving our profitability, performance and shareholder returns. We have commenced a comprehensive strategic review to increase Myer’s profitability and drive sustainable earnings growth. Our objective is to identify opportunities to deliver a step change in Myer’s market position and generate strategic and financial benefits.
Potential merger
Myer has ceased the sale process of sass & bide, Marcs and David Lawrence. It is resetting sass & bide to improve its performance, including the closure of 10 retail stores in the first half of FY25.
It’s exploring a potential combination with Premier Investments Limited‘s (ASX: PMV) apparel brands. Those talks are ongoing, with due diligence underway.
The combination could, according to Myer, significantly enhance scale, revenue and growth, deliver cost and revenue synergies, leverage its loyalty program across a larger customer base, and expand its exclusive and private label portfolio.
Final thoughts on the Myer share price
In the first seven weeks of FY25, department store comparable sales were up 0.2% year on year.
I don’t think Myer can return to its former glory, the retail world has changed too much. But, it could be a cyclical opportunity at the right times when retail conditions are weak. I wouldn’t call it a buy yet, but the fall does make it better value.
