Myer beats expectations

Turnaround strategy brings positive results

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Department store retailer, Myer Holdings (ASX: MYR) has surprised the market, revealing a slight rise in net profit and beating expectations.

The company reported a 0.7% rise in net profit to $88 million on the back of $1.7 billion in sales. Pleasingly, second quarter sales were up 2.1%, continuing the positive trend, which included the Christmas and Stocktake sales period. Myer has cut back on discount sales, exited whitegoods, gaming and consoles, music and DVDs, and the free space reallocated to higher margin fashion categories.

Menswear, cosmetics, womenswear, fashion accessories and childrenswear were the best performing categories, well ahead of last year in both sales and gross profit. Myer exclusive brands grew by 10% during the half and now represent close to 20% of all sales.

The company’s balance sheet has also strengthened, with net debt reducing by $56 million to $242 million, over the previous year, and underlying inventory improved by 6%, showing management’s strong focus on improved product sourcing and getting new products to market and out-the-door faster.

Myer’s loyalty program continues to grow, with more than five million members. Around 70% of Myer’s sales are to members. Online sales continue to grow strongly, and the company reports that it had more than eight million visits during the past six months. Myer declined to give guidance for the full year, saying it remained cautious about the trading environment, despite positives like low interest rates, improving consumer confidence and rising home prices and share markets.

Foolish takeaway

For income focused investors, Myer declared an interim fully franked dividend of  10 cents.

This result continues the positive trend we have seen from discretionary retailers JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings (ASX: HVN), with improvements in sales, after a long period of disappointing performance. That should give other retailers, including David Jones Limited (ASX: DJS) some confidence going forward.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in JB Hi-Fi and David Jones.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »