Myer beats expectations

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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!