Myer posts strongest second-half profit in almost 10 years and resumes final dividend

Myer boss John King has paraded the retailer’s financial strength as his turnaround gathers momentum after unveiling Myer’s strongest second-half profit in a decade.

Myer chief executive John King has paraded the retailer’s financial strength as his turnaround gathers momentum after unveiling on Thursday Myer’s strongest second-half profit in a decade and the resumption of full-year dividends for the first time since 2017.

After the doom and gloom of Covid-19 and lockdowns last year – when Myer lost 2463 department store trading days – from January it quickly roared back into brisk activity at its stores and online, generating bumper profits and sales for the second half.

Growing confidence among shoppers as the threat of the Omicron wave waned has fuelled strong buying across all of Myer’s key department store categories.

The renewed spending retained its momentum into fiscal 2023 to deliver Myer the best start to a new financial year since 2006.

“There’s a lot of traffic in the stores. People want to go out, buying products and we’ve been taking market share, so I think it’s a number of factors really. We’ve seen strong sales across all categories,” Mr King said.

Myer has unveiled its best second-half profit in 10 years and reintroduced a final dividend payment to shareholders. Picture: Paul Jeffers/NCA NewsWire

Now Mr King is turning his attention to the all-important Christmas trading period, which he has dubbed Myer’s “sweet spot”, He expects it will prove rewarding for the retail chain, despite concerns over interest rate rises, rising inflation and tightening household budgets.

“I think we are still cautious but we are confident that we have got the right offer for Christmas for our customer,” he said.

“The situation is that we are flexible and agile enough to pivot into what customers are wanting, a good value proposition … a great brand proposition. Christmas is really our sweet spot at Myer, if you think about it, over the years. Whether it’s the Myer windows, gifts, we are the one-stop shop for Christmas – and that’s where we see our strength,” an upbeat Mr King told The Australian.

Myer posted a net profit after tax for the 52 weeks to July 30 of $60.2m, against $51.7m in the previous year. After adjusting for JobKeeper payments, the 2022 profit was 103.8 per cent higher.

Mr King said that while many of his customers would come off fixed mortgages after Christmas and feel the full force of recent interest rate tightening by the RBA, Myer wasn’t reliant on a single category and could trade across many categories at many different price points.

Myer chief executive John King: ‘I think we are still cautious but we are confident that we have got the right offer for Christmas for our customer.’ Picture: Stefan Postles

This was evidenced by the performance of Myer since July. Despite many households already being hit with three interest rate rises, shoppers continued to spend up at the department store.

It recorded sales growth of 74.8 per cent in the first six weeks compared to last year and 21.8 per cent over pre-Covid levels. It was Myer’s best sales start to a new financial year since 2006.

The Myer CEO, who is the former boss of iconic British retailer House of Fraser, the 173-year-old former owner of London’s famous Harrods department store, is finally seeing the fruits of his labours after his ‘‘customer first plan’’ was launched four years ago.

Despite the upheaval caused by Covid-19, which in fiscal 2022 saw Myer lose 11.4 per cent of its in-store trading days, the retailer recorded full-year revenue of $2.989bn, up 12.5 per cent. Group online sales of $722.8m were up 34 per cent, representing 24.2 per cent of total sales.

It gave Myer the financial firepower needed to resume the full payment of dividends, both interim and final.

Myer declared a final dividend of 2.5c per share, to be paid on November 7.

It paid an interim dividend of 1.5c per share earlier this year.

Operating gross profit grew by 8.5 per cent to $1.145bn.

Margin decreased by 141 basis points to 38.3 per cent, reflecting Covid-related supply chain costs and increased promotional ­activity.

Mr King said the full-year results demonstrated again how his customer-first plan continued to deliver and gain momentum, with Myer recording its best second-half profit result in nine years with another dividend paid to shareholders.

Retailer and Myer’s biggest shareholder Solomon Lew has been stalking Myer for more than five years and is seeking to appoint a director at Myer’s upcoming AGM. Picture: Aaron Francis/The Australian

“We have clearly established strong digital and data credentials in recent years, evidenced by the growth in online and Myer One. However the true strength of our business is its multi-channel opportunity,” Mr King said.

“The combination of our online performance and our store network returning to growth has allowed us to navigate the early challenges in the year and, importantly, capitalise on the new opportunities arising.”

Myer’s biggest shareholder, retail billionaire Solomon Lew, was uncharacteristically silent after the release of the Myer full-year results, despite his five-year campaign to grab board control of Myer. In August Mr Lew used an increased stake in the department store to demand the appointment of ex-Myer Grace Bros boss Terence McCartney as director.

Mr Lew – whose Premier Investments vehicle is the department store’s largest shareholder with a stake of just under 23 per cent – had tried repeatedly to get a number of candidates, including Mr McCartney, onto the Myer board in recent years, but without success.

Mr King on Thursday declined to say whether he had spoken to Mr Lew recently, only remarking that he spoke to all of Myer’s largest shareholders regularly.

He said he would work with any independent director of Myer, including Mr McCartney, if shareholders voted him onto the board.