Myer posted a 5.3% rise in net profit after tax to $62.83 million for the first half in the face of stiff competition as the company’s restructuring starts to pay off.
But sales growth is still an issue. Revenue was flat, down just 0.5%, at $1.78 billion.
Sales increased by 0.3% on a comparable store basis, below analyst expectations of around 2%. And second quarter sales dropped 1.3% to $1.06 billion, down 0.5% on a comparable store basis.
CEO Richard Umbers described the half year comparable store sales growth as “modest”.
Myer has a target of 3% sales growth between 2016 and 2020.
However, industry analysts forecast a continuing tough retail environment for Australian department stores, with weaker than expected consumer sentiment and the rise of digital players.
Umbers says: “Myer delivered encouraging sales around the key trading periods of Spring Racing and Christmas offset by subdued sales during the stocktake sale.”
He says sales during the stocktake sale were influenced by the emergence of widespread discount fatigue among consumers.
Umbers told the company’s AGM in November that he was aiming for a return to profit growth this financial year.
He says the 5.3% rise in net profit for the six months to January 28 was achieved by the combination of improved sales and cost cutting.
“The improved profit result was achieved against a backdrop of aggressive competition with heavy discounting both before and after Christmas and patchy consumer confidence,” he says.
“We are 18 months into our five year transformation and I am pleased with the progress we have made.”
Umbers says sales in January and February were below expectations with January being the low point.
However, he says sales per square metre at the new store in Warringah Mall are up 38% compared to 2014 when the store last traded without centre disruption.
The Myer omni-channel business continues to grow, with online sales up by 48% due to a much improved customer experience online.
“This together with significant improvements in pick, pack and fulfillment contributed to another half of profit growth ahead of sales growth,” says Umbers.
“We continue to make good progress in developing a simplified business model.
“This is demonstrated by the rollout to stores of a workforce management system, more simplified administration processes for store back office and the appointment of external providers to manage our customer support centre and digital services.”
Myer still expects EBITDA (earnings before interest, tax, depreciation and amortisation) growth to exceed sales growth for the full year and profit to be higher than 2016.
The company declared a fully franked dividend of 3 cents, up from 2 cents.
The first half numbers in detail: