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Myer (ASX:MYR) share price plummets on first-half results release

Fall in ASX share price represented by white arrow pointing down
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The Myer Holdings Ltd (ASX: MYR) share price is having a woeful day since the release of its first-half results. During late-morning trade, the Australian department store group’s shares are down 10% to an intraday low of 30 cents.

Below, we take a closer look to see how Myer performed for the H1 FY21 period.

What were the financial highlights?

The Myer share price is moving south as investors digest the company’s latest results.

According to its release, Myer advised that it is continuing to weather the difficult trading conditions caused by COVID-19. However, an eventual recovery is on the horizon once the pandemic subsides.

It noted that for the six months ending 23 January 2021, total group sales stood at $1,398 million. This reflects a 13.1% decline over the prior corresponding period (pcp). In particular, this caused by store closures and reduced CBD footfall.

Comparable CBD store sales sunk 32.2% due to a restricted workforce, impact on tourism, and subdued confidence from continued shutdowns. However, not all was bad as its online sales division surged to $287.6 million, up 71% over the pcp. Improved checkout and browser experience led to the group’s profit.

The Cost of Doing Business (CODB) came to $325.2 million, which resulted in a 20.9% drop compared to H1 FY20. The company continued to execute cost reductions whilst investing in its online segment. The government’s JobKeeper wage program was seen as crucial in maintaining Myer’s workforce.

Earnings before interest, tax, depreciation and amortisation (EBITDA) slightly backtracked to $214.6 million, down 1.7% from this time last year.

Net profit after tax (NPAT) improved to $42.9 million, a jump of 8.4% on the prior comparable term.

Myer closed the period with a net cash position of $201.1 million. Indeed, a substantial increase from the $7.9 million recorded in FY20. This allows the company options to re-invest in its digital segment that can help accelerate future growth.

The board stated that it will keep its dividend suspended in light of the uncertain economic environment.

Management commentary

Myer CEO and managing director John King touched on the company’s results, saying:

The focus remains on profitable sales and executing the Customer First Plan, which has been adapted to respond to COVID-19 by accelerating, re-sequencing and expanding various initiatives. The strengthened balance sheet provides a solid platform for investing in our digital growth engine which represents a significant opportunity.

The Customer First Plan is an overhaul of the business’ approach to improving merchandise offerings, enhance customer experience and satisfaction.

About the Myer share price

The Myer share price is down around 13% over the last 12 months, after going on a rollercoaster ride. The company’s shares hit a low of 8.3 cents last March before trekking to a 52-week high of 41.5 cents in November.

Based on the current share price, Myer commands a market capitalisation of around $246 million.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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