By Emma Koehn
Department store Myer has posted a blockbuster trading update after Australians spent up big at its stores over Christmas leading to the retailer to forecast that its half-year profits to jump by as much as 104 per cent.
Chief executive John King said the company has recorded the best sales it has seen in the first five months of a financial year since records started in 2004.
“The results…are particularly pleasing and more importantly also show improved profitability in the business,” he said.
In an update lodged with the ASX on Tuesday the company revealed total sales for the five months to December 31 were up 24.8 per cent on the same period last year, and store sales were up 37.9 per cent.
The group’s online sales slipped by 9.4 per cent as retail trading lockdowns lifted and shoppers returned in store, but Myer’s online transactions are still up by 39.9 per cent on the same time frame one year earlier.
The department store said that based on the trading numbers, it currently expects a net profit after tax for the first six months of 2023 come in at between $61 million and $66 million – an increase of between 89 per cent and 104 per cent on the result in 2022’s financial year.
That half-year figure does not include “significant items” associated with running the business, but it indicates an acceleration of profits.
By comparison, Myer’s full-year net profit for the entire 2022 financial year was $60.2 million.
The company said, “trading from the stocktake sale period continues to strongly outperform the prior corresponding period, which was impacted by Omicron”.
Myer’s shares jumped more than 5 per cent on the news to close at 90 cents. The company’s shares rocketed in the days leading up to the trading update, gaining more than 21 per cent over the past five days. The sale of David Jones to private equity last year has also raised the prospect that Myer could become a takeover target in 2023.
The numbers come as momentum continues to build at Myer, which recorded some of its best numbers in years during 2022.
The company confirmed last week it had secured a big win in the return of Country Road Group brands to Myer stores, which will be progressively rolled out from next month and throughout the rest of 2023.
Country Road had been exclusively at David Jones for the last several years. Country Road Group’s owners, South African retailer Woolworths Holdings, also owned David Jones but sold the department store to private equity firm Anchorage at the end of last year.
Morningstar analysts say demand for lifestyle products like fashion and beauty have driven spend at stores like Myer, though this growth is expected to slow.
“We expect demand for these products to revert to long-term trends by fiscal [year] 2024. Before the pandemic, the department stores sector was grappling with virtually flat sales in the 10 years to 2019,” its equities team said in a retail report to clients.
The company will report its full half-year numbers in March.
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Source: Thanks smh.com