At time of writing, the share price of Myer Holdings Ltd [ASX:MYR] is up a whopping 17.07%, trading at 48 cents.
It has been a volatile year for the stock, hitting a high of 61 cents and then sinking down to the 35-cent range over the last month:
The latest news out of the company is its first half 2019 results which run through to 26 January 2019, and reveal that sales are down 2.8%, but underlying net profit was up 3.1% for a better than expected result.
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Myer share price reacts to results
The Myer share price flew up this morning.
It has been a period of uncertainty for Myer as it has had to cope with public scrutiny over its results and its leadership.
Joe Aston of the Australian Financial Review wrote a piece in November comparing Myer to the USS Cole, calling into question the Myer’s board decision to not update the market with profit guidance.
This forced the company’s hand and they subsequently released an ASX announcement noting the article, asserting it was in compliance with continuous disclosure obligations and then went into a trading halt.
It later revealed that total Q1 FY19 sales were down 4.8%.
Meanwhile it has had to fend off sustained criticism from Solomon Lew of Premier Investments with regards to Myer’s board.
He has previously referred to the current board as ‘clueless’ and that they ‘wouldn’t know one end of a horse from the other.’
Against this backdrop, Myer has still managed to show signs of life, with a few highlights from its results release:
- Online and omnichannel sales up 18.6% to $151.2 million
- Statutory NPAT of $38.4 million, compared to $476.2 million loss in 1H2018
- Operating cash flow increased by $8 million to $173 million with total net debt down $57 million
CEO and Managing Director John King emphasised how deleveraging was a priority for the company. Mr King said:
‘The debt refinancing was completed in November 2018 and provides a stable platform for the next two years, with substantial headroom in all of our covenants. We remain focused on deleveraging and net debt was reduced by $57 million.’
The outlook for Myer
Myer was cautious in its outlook for 2H2019, noting that the exit of a number of brands and the introduction of new brands would bring additional associated costs.
It will continue to focus on its online presence, but is also aware of the current retail slowdown or ‘macro challenges’.
Much of this is driven by sluggish wage growth and subdued household spending amid the real estate downturn.
A more detailed look at the macro picture for the Aussie economy can be found here.
For Money Morning
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