FY24 Results - Release and Presentation

Myer Holdings reported a 0.4% increase in comparable sales for FY24, despite challenging macroeconomic conditions, while net profit after tax fell 26% to $52.6 million.

Summary

• Myer Holdings Ltd announced its FY24 results for the 52 weeks ending July 27, 2024.
• Group comparable sales increased by 0.4% compared to FY23, reaching $3,266.1 million, despite a challenging economic environment.
• Total sales decreased by 2.9% to $3,266.1 million, primarily due to store closures in Brisbane, Frankston, and Werribee.
• Online sales grew by 2.0% to $704.3 million, representing 21.6% of total sales.
• Net profit after tax (NPAT) was $52.6 million, a significant decrease of 26.0% compared to FY23's $71.1 million.
• The decline in NPAT was partly attributed to the underperformance of sass & bide, Marcs, and David Lawrence brands.
• A final dividend of 0.5 cents per share was declared, bringing the full-year dividend to 3.5 cents per share.
• Operating gross profit margin increased by 15 basis points to 36.6%, while the cost of doing business increased by 1.3%.
• Operating cash flow improved by $8 million to $250.4 million, with net cash at the period end of $113.8 million.
• A comprehensive strategic review is underway, focusing on expanding private label and exclusive brands, and exploring a potential combination with Premier Investments Apparel Brands.
• The company decided to retain sass & bide, Marcs, and David Lawrence brands.
• In the first seven weeks of FY25, department store comparable sales were up 0.2%.

Sentiment

Score: 4

Explanation: While the company highlights positive aspects like customer engagement and strategic initiatives, the significant drop in NPAT and challenges faced overshadow the positive developments.

Positives

• Comparable sales growth of 0.4% in FY24 despite challenging macroeconomic conditions.
• Online sales growth of 2.0% in FY24.
• Strongest engagement with the Myer One loyalty program since its inception.
• Record in-store customer satisfaction score of 84.6% in FY24.
• Improved operating gross profit margin of 36.6%.
• Increased operating cash flow of $250.4 million.
• Strong net cash position of $113.8 million at the period end.
• Decision to retain sass & bide, Marcs, and David Lawrence brands.
• Exploration of a potential combination with Premier Investments Apparel Brands.

Negatives

• Total sales decreased by 2.9% in FY24 due to store closures and challenging macroeconomic conditions.
• NPAT decreased by 26.0% to $52.6 million in FY24.
• Underperformance of sass & bide, Marcs, and David Lawrence brands contributed to the decline in NPAT.
• Increase in Cost of Doing Business by 1.3%.

Risks

• Challenging macroeconomic conditions impacting retail sales.
• Underperformance of sass & bide, Marcs, and David Lawrence brands.
• Delays and increased costs in the ramp-up of the new National Distribution Centre.
• Potential challenges in the exploration of a combination with Premier Investments Apparel Brands.

Future Outlook

Myer is undertaking a comprehensive strategic review to improve profitability and drive sustainable earnings growth. The company is exploring a potential combination with Premier Investments Apparel Brands and expects to provide a more comprehensive briefing on the strategic review and initiatives to drive improved performance and profitability at a rescheduled Investor Strategy Session.

Management Comments

• 'Todays 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.'
• 'We are laser-focused on improving our profitability, performance and shareholder returns.'
• 'We are progressing our discussions with Premier Investments and are undertaking due diligence to assess the benefits for Myer shareholders of a potential combination with Apparel Brands.'

Industry Context

Myer's results reflect the broader challenges faced by Australian retailers in a tough macroeconomic environment. The strategic review and potential combination with Premier Investments suggest a focus on consolidation and leveraging synergies within the apparel sector.

Next Steps

• Complete due diligence on potential combination with Premier Investments Apparel Brands.
• Reschedule Investor Strategy session to update the market on future strategic approach and Apparel Brands acquisition.

Key Dates

Keywords

Myer Holdings, FY24 Results, Retail, Comparable Sales, Online Sales, Net Profit, Dividend, Strategic Review, Premier Investments, Loyalty Program