The Myer Holdings Ltd (ASX: MYR) share price is under the spotlight today after reporting its HY25 result.
FY25 half-year result
Here are some of the highlights from the department store company’s first six months of FY25:
- Total sales up 0.8% to $1.83 billion
- Cost of doing business increased 1.9% to $457.8 million
- Underlying net profit after tax (NPAT) declined 18.5% to $42.4 million
- Statutory net profit of $30.4 million
There were quite a few moving parts in the result.
Myer said its comparable sales grew 0.8% – total sales suffered from the closure of Brisbane and Werribee stores, as well as 10 standalone sass & bide stores for all or part of the reporting period. Online sales grew by 4.8% to $409 million.
Its operating gross profit reduced 1.4% as a result of sales mix shift to concessions, promotional intensity in response to trading conditions, and additional distribution costs because of national distribution centre (NDC) complications.
The NDC ‘complications’ hurt EBIT by around $12 million, including Myer exclusive brands (MEB) stock unavailability of $7 million, dual sites costs of $3 million and online fulfillment costs of $2 million. Myer said the fulfilment costs should have been a saving.
The NDC went live in August 2024, but the site experienced implementation issues and is not yet operating as designed. Online fulfilment was transferred to stores.
A review has confirmed automation and integration issues, with remediation actions “currently being developed”. The business is expecting the annual benefits of between $5 million to $10 million when it’s working properly.
Statutory net profit was hampered by acquisition costs buying the new apparel brands business, and strategic review and implementation costs of $2.5 million.
Second half update
Myer completed the apparel brands transaction on 26 January 2025.
The company said trading conditions remained challenging because of the high cost of living. Sales in the first five weeks of the FY25 second half were down 2.6%.
It’s expecting the NDC challenges “will continue” to impact financial performance in the second half of FY25.
The profit hits aren’t what shareholders want to see, and it’s disappointing that its NDC has been a hindrance to financial performance rather than a help so far. However, it should be helpful when fully operational.
Is the Myer share price a buy?
If the business can grow sales and profit in the coming years, it could be undervalued at the current level. However, there are other ASX retail shares I’d rather buy where the long-term outlook is clearer.
