This morning Myer Holdings Ltd (ASX: MYR) reported its half-year results for the 26 weeks to 26 January 2019. Below is a summary of the results with comparisons to the prior corresponding period.
- Net profit after tax of $41.3m, up 3%
- Sales revenue of $1.67b, down 2.8%
- Comparable store sales down 2.3%
- EBITDA of $113.6m, up 4.9%
- Online and 'ominchannel' sales up 18.6% to $151.2 million
- Basic earnings per share of 4.8 cents
- No interim dividend
- Debt of $95.4 million, net debt down by $57 million
- Net cash position of $37 million
The Myer share price is up 15% or 6 cents to 47 cents in response to the result, with a sales decline of 1.4% in the second (Xmas) quarter representing a significant improvement on a 4.8% sales decline in the first quarter.
Myer and its department store operations remain in the 'turnaround' category after the stores suffered from years of underinvestment, with both same store and total sales still falling despite the 18.6% growth in online sales they still only represent less than one tenth of total sales.
Moreover, online sales are not growing as quickly as other retailers that have invested more heavily in the online space.
Despite the falling total sales one positive is that its operating gross profit margin improved thanks to, inter alia, less discounting and the promotion of higher margin Myer Exclusive Brand products.
Its CEO declined to provide any specific profit guidance for the second half other than to state it would stick to the strategy of focusing on "profitable sales", managing costs and deleveraging the balance sheet.
Using conventional valuation metrics the stock is arguably cheap, but investors need to consider the debt load, competitive headwinds, and inability of the group to reverse its falling sales.
As such I'm not a buyer of Myer shares, with better retailers to consider including Breville Group Ltd (ASX: BRG) and Premier Investments Limited (ASX: PMV).
