Upscaled department store chain Myer [ASX:MYR] has cheered...

Upscaled department store chain Myer [ASX:MYR] has cheered wearied shareholders today after announcing a record first half of sales of $1.88 billion.

NPAT (net profit after tax) was the highest since the first half in 2014, with $65 million.

This has resulted in a very healthy interim dividend of 8 cents a share, fully franked, which Myer’s chief executive says demonstrates company confidence for the rest of 2023.

Shares for MYR were unsurprisingly surging by more than 15% on Thursday morning, worth $1.10 a share.

This has boosted shares 23% in the past week, 62% so far in 2023, and a whopping 169% higher than its industry average over the year:

Myer’s record first half cycles robust dividends

After a rough cycle caused by the limitations of the pandemic, the group’s half-year report was welcome news.

The group touted a record for half-year sales with $1.88 billion, of 24.2% growth that was even higher than the first half of 2020 (by 17.2%).

NPAT was $65 million, an increase of $32.7 million (or 101.4%) meeting the company’s guidance from January, and earnings before interest and tax went up $139.6 million (from $96.7 million).

Online group sales were $382.3 million (20.3% of total sales), which declined 9.8% as customers preferred to come back for the bricks-and-mortar experience post-lockdown. This also represents a three-year annual growth rate (a CAGR) of 31.5% from the first half of 2020.

Myer’s operating gross profit grew 17.4% to the total of $683.2 million, with a margin decrease of 212 basis points to 36.3% (including unfavourable foreign exchange movements).

Business expenses totalled $442.5 million — 23.5% of total sales — improving 126 basis points.

John King, Myer’s CEO, commented:

‘We are very pleased with the strength and quality of our first half results, with a best-on-record first half sales performance, significantly improved profitability and a balance sheet that continues to provide a strong foundation for future growth. The result reaffirms our view that the Customer First Plan is the right strategy, which continues to deliver strong outcomes for our business and shareholders.’

Myer says it has improved balance sheet, with net cash at the end of the six months of $267 million, an increase of $50 million.

The group declared a fully franked interim dividend of 4 cents a share, plus an additional special dividend of 4 cents.

As rate hikes continue to hit the broader market, this is likely to have an adverse impact on consumer cyclical stores alike. It will be interesting to see how the department store industry manages incoming turbulence as even tighter cost-of-living challenges approach.

King concluded:

‘Like all retailers we remain cautious about the macro-economic environment, however, we are pleased with the momentum we are generating through the Customer First Plan and have a strong pipeline of initiatives still to come, which will ensure we are well placed for the future.’

Regards,

Mahlia Stewart

For Money Morning

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