Shareholders who hung on from the $4.10 a share float in department store group, Myer, almost had a shock yesterday.
The shares peaked at $4 a share, within sight of what they paid back in November of 2009, the highest they have been since the refloat.
The shares ended at $3.92, down a cent on the day. But they are still up 30% since May.
And why the strength?
Myer may have reported that it narrowly missed forecasts with a 50.4% rise in 2010 underlying profit, boosted by cost cuts and sales of its higher-margin private label products, but investors forgave them.
The stock is no longer on probation.
Myer said net profit before one-offs rose to $163.5 million for the 12 months to July 31, from $108.8 million a year earlier when there was one week’s less trading.
The result excludes $96.4 million in float costs and compares with expectations for $166.5 million from most analysts.
The retailer pointed top the solid performance in earnings before interest and tax, which is a traditional retailing measure of profitability.
"Earnings before interest and tax (EBIT) up 14.9% to $271 million (2009: $236 million), ahead of prospectus forecast of $261 million, it told the market.
But Myer did make good coming in ahead of the prospectus in just about every other respect, as it pointed out in its release and briefings.
Sales growth was under prospectus forecasts, but the company had already updated on that in its sales figures release last month.
"Total sales for the 52 weeks to 24 July 2010 were $3,284 million, up 0.7% compared to last year.
"Excluding the impact of the Myer Melbourne rebuild, total sales were up 1.3%.
"On a like-for-like basis, sales grew by 0.5%," the company said yesterday.
Myer forecast net profit for the 2011 year will grow by 5 to 10%, which is about where David Jones, its rival, sees earnings growth.
We will know more from DJs because it’s due to follow Myer down the reporting route in the next week.
The company announced a final dividend of 11.5 cents a share, fully franked, for a full-year dividend of 22 cents, just above the prospectus forecast range of 20.5 to 21.2 cents a share.
Myer chief executive Bernie Brookes said the retail sector experienced a challenging environment in the 2010 financial year courtesy of the global financial and weak consumer confidence.
"Against this backdrop, and despite an extensive rebuild of our flagship Melbourne store, the refurbishment of three other stores and the rollout of major technology infrastructure in our new Point-of-Sale and CCTV systems, Myer reported a positive sales result," Mr Brookes said in the statement yesterday statement.
"Our EBIT (Earnings before interest and tax) result was 14.9 per cent above last year, and 3.9 per cent above the prospectus forecast."
The performance of the company during fiscal 2010 was due to an improved business model, Mr Brookes said.
"After 50 months of fundamental business transformation, we have a significantly more efficient and profitable platform from which to grow," he said.
"We are proud of the turnaround that we have achieved at Myer. We have reached an important milestone, however the journey is far from over and the team and I are excited about delivering on our growth promise and increasing returns to shareholders."
Mr Brookes said the company would benefit from the opening of new stores along with its flagship store in Melbourne.
"During the next financial year our performance will benefit from a significant uplift in sales at Myer Melbourne, as well as a full year of sales from our new store at Top Ryde and nine months sales contribution from our new store at Robina," he said.
"In addition, our refurbished Canberra City, Charlestown and Garden City stores are due to relaunch ahead of Christmas 2010."
In contrast, that wallet-breaker, also known as Sigma Pharmaceuticals, produced another shocker yesterday, another multi-million dollar asset impairment, taking the total so far this year to close to $700 million.
Sigma told the market that it will book an impairment of $220 to $270 million in its half year results relating to the impending sale of the company’s pharmaceuticals division to Aspen Pharmacare Holdings.
Following the announcement before trading Sigma shares 2.5 cents, or 5.1%, to 46.5 cents where they remained for the rest of the day.
Sigma says it is required to review the carrying value of its relevant cash generating units in its results, which includes the pharmaceuticals division.
"As a consequence of accepting Aspen’s proposal for the Pharmaceuticals Division (and after consultation with its auditors as to the timing of recognising the accounting implications of the sale) it is likely that Sigma will book an impairment of the carrying value of the Pharmaceutical Division in the range of $220 to $270 million in its forthcoming half year results," the company said in a st
