Just a follow-up to this regarding my ongoing thoughts. Would be very interested to see if anyone has any figures that are different to my own on this.
Objective information since October:
- all retailers reporting large gross margin uplifts- MOZ 6%, ADH 6%, MHJ 2%, Mocka 1.5%.
- Woolworths (RSA) parent holdings for DJs showing -10% sales for first 10 weeks of the half
- ABS figures showing Oct was roughly even yoy for department stores
- very strong web traffic (similarweb) + trends data as well as favourable financial news coverage suggesting November was a record month
- most omni retailers with good online offerings reporting approx 100% yoy increases in online sales through end of November (ADH, DJs as examples)
- second wave over
I think Myer should be able to command at least 2% margin uplift with shift in consumer mix to higher gross margin items (apparel), improved supplier discounts (H2 damage was 3% based on the presentation). Hopefully they can improve the profitability of online with scale. If so, by my calculations using a range of revenue from 1525m (low end) to 1690m (high end) I get a profit before tax of ~75-143m. I've assumed 270m concession sales, 19m Myer one, 35m other revenue, 40.4% operating gross margin, 350m sales and marketing, 145m G&A and 0 abnormals (perhaps generous on the last one), with finance costs related to lease liabilities of 45m.
This is before any additional benefit from jobkeeper, which by my estimates could be about 50m.
Obviously H2 has been weak for a few years now, but from 2022 onwards the cashflows from the lease savings on the new SSO kick in and a full 20% of their lease commitments over the next 2.5 years are up for renegotiation. Fx should also kick in with 5-10m minimum which I haven't factored in either.
Can anyone give me objective information for a figure lower than say 70m profit before tax for the half? They are working off about 100m in lease liabilities pa, so within 2-3 years as long as sales are maintained the income statement profitability should start to improve. The cashflow statement should improve too, but hopefully there will be a small inventory build to support higher sales...Thinking of buying more with the price drop but I've already got quite a few!
@Kloggany thoughts?
(20min delay)