The Myer Holdings Ltd (ASX: MYR) share price has been hammered by investors in mid-morning trade. Myer released its FY20 results to the market and shareholders did not seem pleased.
At the time of writing, the Myer share price is down 14.9% to 22 cents compared with the All Ordinaries Index (ASX: XAO) which is up 0.5% to 6,090 points.
What did Myer announce?
It was an expected poor FY20 result for Australian department store group. For the 12 months ended 30 June, Myer reported total sales of $2,519 million, a drop of 15.8% on the prior year. This was reflected by widespread store closures and restricted foot traffic.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $305.3 million, declining 41.6%.
Despite a record surge in group online sales of $422.5 million, up 61.1%, the company saw a net loss after tax of $11.3 million. This was heavily weighed down by the impact of COVID-19 that included a higher mix of clearance sales skewed to lower margin products.
As a result of management’s prudent approach to preserving cash through cost-control measures, net cash improved by $46.6 million to $7.9 million at the end of the period.
Myer has extended its $340 million bank facilities until August 2022. Covenant for future periods will be tests quarterly.
The board will continue to suspend Myer’s dividend payment to shareholders.
What happened to the Myer share price?
The COVID-19 pandemic and subsequent government actions have had a significant impact on the department store during 2H20.
At first, the company saw early impacts that were generally limited to delays in supply chain and sourcing private label products. However, as COVID-19 progressed, Myer was forced to shut all 60 stores. This severely hit revenue.
From 30 May, all stores excluding 11 metropolitan Melbourne stores have re-opened and resumed trading. Reduced foot traffic still remains, particularly in CBD locations.
Myer’s significant investment in developing its website ensured peak volumes were handled, as this underpinned sales growth. The company saw a 50-basis point improvement in conversion, and an improved gross profit for the online channel.
Myer has implemented a raft of changes across its stores in hope of seeing a return to normal trading. The department retailer did note an increase in customer satisfaction following the re-opening of its stores.
Myer did not provide any FY21 guidance given the uncertain nature of COVID-19. However, the company noted it would remain agile with a focus on cash preservation. In addition, Myer will look to drive costs down and deleverage its balance sheet.
About the Myer share price
The Myer share price is down by more than 65% from a trailing 12 months. Today’s result will offer little relief to shareholders as the Myer share price has been falling off a cliff since 2013. Although the company has somewhat recovered from its 8.3 cent March low, the Myer share price has been an underperformer in the last 3 months where the broader All Ordinaries Index (ASX: XAO) has fared better.