Myer Returns to Profits After Four Years, Withholds Dividends

Power Retail By Power Retail | 16 Sep 2021

Myer is pushing its customer-first initiative heavily in FY21, with its H2 FY21 results ‘best since 2016’. But it still withholds dividends, despite JobKeeper, rent waivers and a boost in net profits.

Myer is reporting an impressive FY21, with an incremental increase of 5.5 percent in total sales to $2.658 billion. Furthermore, it has returned to profitability for the first time since 2016. However, Myer – for the fourth year in a row – has suspended its dividends. This is despite strong online and profit growth, and receiving JobKeeper subsidies and rent waivers throughout the year.

Its EBIDTA has increased 27.7 percent to $390 million – depreciation was ‘down slightly’ by 3.2 percent. This reflects lower capital investments and prior year impairment of right-of-use lease assets. Furthermore, Myer recorded NPAT at $51.7 million, compared to last year’s net profit loss of $13.4 million. Its statutory profit after tax of $46.4 million, up from a loss of $172.4 million. Myer remains net cash positive with $111.8 million, up $103.9 million YoY.

“This result is a testament to the hard work of our team, and we are starting to see the business thrive despite the extraordinary market conditions. Our significantly improved FY21 results, including growth in profitability for both the first and second half, demonstrates the Customer First Plan is getting real traction,” shared John King, CEO, on Thursday. “Despite the on again off again nature of physical retail over FY21, when combined with continued growth in the online business, we delivered solid sales growth when not impacted by lockdowns, particularly in 2H21.”

The omnichannel retailer has recorded stronger online growth, with a 27.7 percent increase to $539 million. Currently, online represents 20.3 percent of total sales, up from seven percent. Myer is planning to continue investing in its online platforms.

For this FY, CEO John King explained the retailer’s focus remained on ‘online growth, disciplined cost control, and deliverance of balance sheet’. CODB increased by 1.5 percent due to further investment into online growth.

In the first half of FY21, net JobKeeper wage subsidies of $32 million were recorded, alongside $18 million in rent waivers. Myer received a $1 million rent waiver and no JobKeeper in H2. Post-tax, the total support from JobKeep er was $36 million, which the retailer claims were critical in ‘maintaining connection to the workforce when Myer was closed’. The retailer was shut for nine percent of trading days in FY21.

The retailer recorded a continued fall in foot traffic, as a result of the pandemic. This is approximately nine percent of trading days lost this year, compared to 15 percent in the previous year. Its supply chain also remains disrupted, but CEO, John King, ensures that early preparation will prevent supply chain stress in the lead up to the holiday period.

The period of the FY that had the least impact from lockdowns was from March to May 2021. Over these months, the retailer’s gross profits were up 6.6 percent compared to FY19, before the pandemic was announced.

Myer has named JoAnne Stephenson as the Chairman of the Board. This comes after several months of tension from its primary investor, Premier Investments – namely CEO, Solomon Lew – who has proposed and ‘expects‘ to see a refreshed Myer board.

In early August, Lew shared his views regarding the situation, of which he taught ‘common sense’ from the Board. “For a long time, Myer’s few remaining directors have been unable to attract well-credentialed independent non-executive directors to join the Board and have made no progress in appointing a permanent Chairman,” he said at the time.

Further to the announcement of Myer’s new Chairman of the Board, the retailer is also naming Ari Mervis as a member. This role will be effective from 20 September 2021. “Ari brings global experience spanning a range of industries in branded goods and consumer staples bringing deep understanding of consumer markets. “With his executive experience in driving sustainable top-line growth, cost reduction and unlocking value through portfolio optimisation, Ari will bring valuable insights to the Myer Board and business.”

At the time of writing, Myer’s shares are down 1.92 percent over the course of five days to $0.51 a share.

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