Myer Holdings Ltd (ASX: MYR) shares are on the move on Friday morning.
In early trade, the ASX retail stock is down 11% to 77.7 cents.
This follows the release of the department store operator's full year results.
Myer shares sink on FY 2024 results
- Total sales down 2.9% to $3,266.1 million
- Comparable store sales up 0.4%
- Cost of doing business up 1.3% to $834.7 million
- EBITDA down 10.2% to $359.7 million
- Net profit after tax down 26% to $52.6 million
- Fully franked final dividend of 0.5 cents per share
What happened during the year?
For the 12 months ended 31 July, Myer reported a 2.9% decline in total sales to $3,266.1 million. This reflects the closure of Brisbane, Frankston, and Werribee stores for all or part of the year, as well as challenging macroeconomic conditions. Comparable store sales were up 0.4% year on year.
Myer's costs increased by 1.3% to $834.7 million. Though, this would have been broadly flat if the delivery income reclassification was excluded. This reflects its focus on mitigating cost increases, including the impact of store closures.
On the bottom line, the ASX retail stock reported a net profit after tax of $52.6 million, which is down 26% year on year. Management advised that this reflects the impact of store closures, challenging trading conditions, inflationary cost pressures, and the underperformance of sass & bide, Marcs and David Lawrence.
Management has commenced a reset of sass & bide to improve its performance. This includes the closure of 10 retail stores in the first half of FY 2025 (with four stand-alone stores remaining), the restructure of its support operations, and new Myer concession pads to open in the coming months.
In light of Myer's profit decline, the company's board was forced to cut its final dividend by 50% to 0.5 cents per share. This brought its fully franked dividends to 3.5 cents per share for FY 2024, which is down 61% year on year.
A challenging year
Myer's executive chair, Olivia Wirth, acknowledged that FY 2024 was a challenging year for the ASX retail stock. She said:
Today's result reflects the challenging macroeconomic environment for Australian retailers. Despite the tougher trading conditions, work undertaken by the Myer team in recent years has helped stabilise the business and established a foundation for future growth. With a highly engaged customer base, a leading loyalty program, positive comparable department store sales growth and high levels of trust in the Myer brand, there are significant opportunities for growth.
We are laser-focused on improving our profitability, performance and shareholder returns. We have commenced a comprehensive strategic review to increase Myer's profitability and drive sustainable earnings growth. Our objective is to identify opportunities to deliver a step-change in Myer's market position and generate strategic and financial benefits.
Outlook
Myer provided the market with a very brief update on its outlook. It advised that for the first seven weeks of FY 2025, department store comparable sales are up 0.2% versus the prior corresponding period.
Management also confirmed that due diligence is underway in relation to the possible merger with the Apparel Brands business of Premier Investments Limited (ASX: PMV). Wirth commented:
We are progressing our discussions with Premier Investments and are undertaking due diligence to assess the benefits for Myer shareholders of a potential combination with Apparel Brands. While this process is still underway, we are seeing opportunities to capitalise on the highly complementary nature of the businesses and potential cost and revenue synergies across supply chain, sourcing, property and brand management.
