Earnings doubled, dividend surprise and a positive guidance: Myer defies the retail doom and gloom
Myer shares jump almost 20% in early trade after announcing an impressive first half result.
Source: Unsplash
Mentioned
KEY POINTS
- Myer's first-half FY23 profits doubled to $65 million, the highest since 2014
- An 8 cents interim dividend was declared (a 50/50 split between ordinary and special dividend)
- Sales for the first eight weeks since Christmas are up 16.1.%
Myer's (ASX: MYR) shares rallied as much as 19% on Thursday to levels not seen since May 2017 following its latest half-year FY23 triple crown (an earnings beat, dividend beat and positive outlook).
First-half results at a glance
Total sales of $1.88 billion, up 24.2%
Group online sales mix of 20.3%
Net profit of $65.0 million, up 101.4%
Net cash position of $267 million compared to $50 million a year ago
Interim dividend of 8 cents per share (comprised of 4 cents ordinary dividend plus a special dividend of 4 cents)
Key takeaways
On sales growth: Myer's half-year sales between FY17-20 had a compound average growth rate of -3.4%. The company has now reversed that downtrend, with 1H23 sales 17.2% higher than pre-Covid.
Member momentum: Myer One members are up 11.4% year-on-year to 7.0 million while active members are up 17.1% to 4.1 million, representing one of Australia's largest retail loyalty programs.
Strong cash flow: Myer posted $174.9 million in free cash flow for the first-half, up from $173.1 million a year ago. That's a free cash flow yield of approximately 22% (compared to current market cap of $780 million).
Outsized cash position: Myer remained net cash for the entirety of 1H23, the first time since its ASX listing. The $267 million cash position represents just over a third of the company's current market cap.
Huge dividend: Ord Minnett was expecting Myer to pay out a full-year dividend of 6.6 cents per share. But Myer has lapped those expectations, paying out an interim dividend of 8 cents per share. At its current share price of $1.035, that’s a 7.7% yield.
Trading update
Group sales have increased 16.1% over the eight weeks since Christmas. This is in-line with trading updates from peers such as Premier Investments (ASX: PMV), which noted 23.6% sales growth for the first 17 weeks of 1H23.
“Like all retailers we remain cautious about the macro-economic environment, however, we are pleased with the momentum we are generating through the Customer First Plan and have a strong pipeline of initiatives still to come, which will ensure we are well placed for the future," said CEO John King.
Myer 12-month price chart (Source: Market Index)
