Myer Holdings Ltd (ASX: MYR) shares are under pressure on Thursday morning.
At the time of writing, the ASX All Ords stock is down 7% to 78 cents.
Why is this ASX All Ords stock sinking?
Investors have been selling the department store operator's shares this morning following the release of a trading update for FY 2024.
According to the release, Myer's second half comparable store sales were up 0.8% on the prior corresponding period. This compares to 0.1% growth during the first half, bringing its comparable store sales growth to 0.4% for the year.
Also growing in FY 2024 were the ASX All Ords stock's online sales. They increase 2% year on year to $704 million, which represents 21.6% of total sales. This is up from 20.5% in FY 2023.
As a result, Myer expects to report total sales of $3,266 million for FY 2024. This is down 2.9% year on year, with the closure of the Myer Brisbane City and Frankston stores offsetting its online and comparable store sales growth.
Profit warning
While the ASX All Ords stock's top line performance was relatively positive, this hasn't been the case for its profits.
Myer warned that it expects its FY 2024 net profit after tax to between $50 million and $54 million. This will be down 24% to 30% year on year.
Management blamed this decline on a number of factors. This includes the challenging consumer and trading environment, the impact of store closures, and inflationary cost pressures.
In addition, it notes that there has been a notable underperformance from three Myer Specialty Brands (sass & bide, Marcs and David Lawrence). This is due to the weak trading environment and additional discounting. The underperformance of these brands is expected to represent approximately half of the year-on-year profit decline.
Commenting on the 12 months, the ASX All Ords stock's executive chair, Olivia Wirth, said:
The second half sales performance demonstrates resilience in the face of a difficult trading environment for Myer and the wider retail sector, coupled most notably with the closure of our Brisbane CBD store and the underperformance of the sass & bide, Marcs and David Lawrence brands.
In the current challenging trading conditions, we are acutely focused on optimising operational performance including tightly managing costs, inventory, and margins and fully leveraging our MYER one loyalty program. We are also positioning the business for growth and are well progressed in a comprehensive strategic review of the business. We look forward to discussing the strategic review at an investor presentation in October.
