Myer share price falls despite FY22 profit surge

The Myer Holdings Ltd (ASX: MYR) share price is falling on Thursday morning.

In response to the department store operator’s full year results, its shares have dropped 3% to 61.5 cents.

Though, it is worth highlighting that the Myer share price rose 6% yesterday despite the market selloff.

Myer share price down despite doubling profits

• Total sales up 12.5% to $2,989.8 million (comparable sales up 15%)
• Online sales up 34% to $722.8 million
• Operating gross profit growth of 8.5% to $1,145.2 million
• Net profit after tax up 103.8% to $60.2 million excluding JobKeeper
• Fully franked final dividend of 2.5 cents per share, bringing full year dividend to 4 cents per share
• Net cash up to $74 million
• Outlook: Strong start to FY 2023

What happened in FY 2022?

For the 12 months ended 30 July, Myer reported a 12.5% increase in sales to $2,989.8 million. This was driven by a 15% lift in comparable store sales and a 34% jump in online sales to $722.8 million. The latter now represents almost 25% of its overall sales.

This was underpinned by its addition of almost 600,000 new active customers in FY 2022, bringing its total active customers to 3.7 million. Importantly, the new additions were largely from younger demographics.

Myer’s operating profit grew a touch slower at 8.5% to $1,145.2 million. This reflects a 141-basis points reduction in its margin to 38.3% due to COVID-related supply chain costs and increased promotional activity.

Nevertheless, on the bottom line, the company reported a 103.8% increase in net profit after tax to $60.2 million if JobKeeper support is excluded from the prior year.

This allowed the Myer board to declare a fully franked 2.5 cents per share final dividend, which brought its full year dividend to 4 cents per share.

Management commentary

Myer’s CEO, John King, was very pleased with the company’s performance in FY 2022

The full year results demonstrate again how the Customer First Plan continues to deliver and continues to gain momentum, with our best second half profit result in nearly 10 years and another dividend paid to our shareholders.

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. 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.

Outlook

King revealed that Myer’s dividend payment is a sign of confidence in the company’s outlook, particularly given its incredibly positive start to FY 2023. He commented:

Myer will again pay a dividend demonstrating our confidence in the momentum being built as we move into FY23, with department store sales growth in the first six weeks up 74.8% against last year and 21.8% over pre COVID levels demonstrating our best sales start to a new financial year since 2006.

Despite the broader economic uncertainty, we are well placed with the right value based proposition of affordable and aspirational brands, a performing store and online offer underpinned by a leading loyalty program providing greater value and choice for our customers.

The post Myer share price falls despite FY22 profit surge appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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