Myer 1H15 result down 23%

About the author:

Josephine (Jo) Little
Author name:
By Josephine (Jo) Little
Job title:
Senior Analyst
Date posted:
19 March 2015, 1:59 PM
Sectors Covered:
Consumer Discretionary, Industrials & Developers

Myer's (MYR) core NPAT for 1H15 was A$62.2m, down 23% on the previous-corresponding-period. 

Like-for-like sales rose by 1% in the second quarter. This appears ok, but when you factor in the uplift from refurbished stores, it implies plenty of the existing stores saw negative comp sales...a worrying trend.

MYR pointed to womenswear as the key challenge for the group. Gross margins fell (really should have been up on the pcp) due to promotional activity to stimulate sales (a worrying sign as this isn't really eventuating) and the lower AUD. 

The interim dividend of 7 cents per share represents a 67% payout ratio.


Management has pointed to a very tough second half of the FY15. Full year guidance has been cut to $75-80m (excluding A$7m of one-off costs). This is around 13% below consensus.


Plenty of uncertainty and a strategic review is ongoing. The new CEO could well take aggressive action in the near-medium term to ensure the business can turn around longer term.

We continue to avoid this stock in spite of the seemingly 'cheap' valuation and relatively high debt.

Management changes are likely to see some significant restructuring, however the risk of further investment opex and potential for store closures (which would potentially cause another step-down in consensus earnings) means it is too early for us.

This business has little to no competitive advantage in a highly competitive market. Still an avoid here and highlight the potential risk to the dividend down the track.

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