Without the millions in JobKeeper subsidies and rent waivers from landlords, Myer would have been well and truly in the red and on the brink of something more damaging than just a loss for the six months to the end of January.
Instead of a whacking great loss for the half, the country’s largest department store revealed it grew profits by 8%.
Investors took fright, sending the shares down nearly 12% to close at 29 cents.
But there was one bit of good news – like its retailing peers, Myer’s sales surged in the half and helped cushion the blow from lower store sales.
The rise came on a slump in sales that was always going happen given the extent and intensity of the lockdown in Victoria for most of the half and smaller sudden closures in other states.
There’s no interim dividend of course; not with the millions in JobKeeper and the landlord rent relief – that wouldn’t have been very smart.
Net profit after tax rose 8.4% to $43 million, thanks to the $51 million worth of JobKeeper payments, almost half of which was a direct benefit to the company and $15.8 million in rent concessions from landlord .
On a statutory level, which took into account impairments incurred in the prior corresponding half, profit rose 70%. Earnings before interest, tax, depreciation and amortisation were down 1.7% to $214.6 million.
The rent concessions from landlords were booked as a cost cut, so the company’s cost of doing business fell 21% over the half.
With the worst of the pandemic over and lockdowns mostly relaxed and retail sales strong, those recent concessions will no longer help the company in the current half and its cost of doing business will rise and pressure earnings.
Revenue fell 13.1% to $1.4 billion due to reduced traffic in stores, many of which are in inner-city locations (such as the Melbourne, Sydney, Brisbane and Adelaide CBDs) which were hit by the lockdowns, social distancing rules and the sending home of hundreds of thousands of city workers, especially in Melbourne.
Excluding the CBD stores, comparable sales for the half rose 6.3%.
Online sales jumped 71% to $287.6 million, or 21% of total sales.
CEO John King said the company was one of the largest and fastest-growing online retailers in Australia.
“The first half result reflects several positive achievements including the continued strength of our online business, now representing 21 per cent of total sales, as well as sustained disciplined management of costs, cash and inventory,” Mr King said.
“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,” Mr King said.
