Why the Myer share price crashed 12% on Thursday

We look at the highlights from the retailer’s interim (H1) results.

Since its March 2020 lows, the Myer (ASX: MYR) share price has been on a hot streak: rising 255% as investors seemingly pile into any stock with an online or e-commerce spin.

While the iconic retailer did indeed report heady online growth as part of its just released (FY21) interim results, revenue and comparable store sales were both down and management said dividends would remain suspended.

It seems that impressive online sales growth couldn’t sate investors, with the stock down 12.12%, to $0.29 per share, a little after noon on Thursday.

Below we look at the highlights from the first-half results.

Results at a glance

Continuing a trend started in 2016, Myer saw its total first-half sales again decline, falling 13.1% to $1,398 million. This was attributed to store closures and weaker foot traffic as a result of the pandemic. Despite that explanation, it should be noted that the retailer’s full-year revenues have been in decline since FY16.

On a more granular level, with some of Myer's largest and most popular department stores suffering closures during the half, the retailer noted that comparable store sales had dropped 3.1%. Excluding the impact of Myer’s six key CBD stores however, comparable store sales were actually up 6.3%.

While overall revenues have continued to decline, the company did flag impressive growth across its online sales channels, reporting online sales of $287.6 million, implying a strong growth rate of 71%. Online sales now make up around 21% of total sales and Myer has described itself as one of Australia’s ‘leading digital retailers’.

In explaining this performance, it was noted that:

'The continued rapid growth reflects several factors including the extensive improvements to the website undertaken during the past three years, the widespread trust associated with the Myer bran and the improved fulfillment capacity and efficiency.’

Costs (cost of doing business) also fell sharply in the half, down 20.9%.

This focus on operational discipline has been a key priority for Myer’s CEO John King, with Mr King proudly saying:

'We have now delivered five consecutive halves of reduced operating costs which, combined with a significantly improved balance sheet, has ensured the company was able to withstand this challenging operating environment.'

Show me the money

Despite lower overall sales for the 26 weeks to 23 January 2021, Myer has seen its cash position dramatically improve and its net profits rise.

Net cash hit $201.1 million (+$98.2 million), while its inventory fell 22%. This inventory rundown was a reflection of 'merchandise cycle improvements, better stockturn and some product availability issues,’ the company said.

On the bottom-line, Myer saw both its earnings (EBIT) and profits (NPAT) improve, coming in at $109.0 million and $43.0 million, implying improvements of 2.7% and 76.3%, respectively.

Despite its cash position and stronger earnings, the Board said that its dividend would remain suspended. No commentary on when the company may resume dividend payments was given as part of the interim release. Myer last paid a dividend of 2.0 cents per share in late 2017.

Myer share price (ASX: MYR): Are you bullish or bearish?

Trade ASX-listed stocks long and short with IG today.

Create an IG trading account or log in to your existing account to get started now.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.