No joy for holders of Myer shares (especially those who have held from last year’s float, or who bought in soon after).
Sales were weak in December, but the company will maintain earnings at the guidance level, according to a trading update yesterday.
“While sales in the December month were disappointing, the business performed very strongly in January and the stock-take sale was a great success,” CEO, Bernie Brookes said in the statement.
“We now expect to achieve growth in EBIT in excess of 10 percent for the first half.”
The shares fell 9 cents on the trading update to $3.29, and then closed down at $3.27, off 13c on the day.
That’s still a long way from the float price of $4.10.
First half sales for the December half rose 2% and 1.2% like for like.
Overall industry sales fell 0.7% in December, according to ABS data yesterday.
But for the quarter, they were up 1.1%, after a fall of 0.7% in the three months to September.
So Myer did better than the wider sector, especially as the ABS said department stores lost ground in December.
Myer chief executive Bernie Brookes said earnings before interest and tax (EBIT) for the first half were expected to increase by more than 10% over the corresponding period last year, and would be in excess of the prospectus guidance of EBIT growth of 5.6%.
That would put earnings around $261 million for the half before tax and interest.
But investors chose to ignore that and sent the shares lower.
Revenue rose to $1.8 billion in the six months ended January 23.
In the second quarter, which includes Christmas, sales were “flat” with revenue from stores open at least a year falling, the company said without providing specific numbers.
Sales in the first quarter were up 5.2% on a top line basis.
The retailer said like-for-like sales were strong in November and January, but they had been "negative" in December, reflecting both the "very challenging" pre-Christmas trading environment in which consumers delayed purchases in anticipation of the post-Christmas sale period, and the anniversary of the first Federal government stimulus package.
"The period leading up to Christmas 2009 was characterised by earlier and deeper discounting in the retail sector than has been evident for many years," Myer said.
"Despite this backdrop, Myer is now expected to deliver strong EBIT growth, in excess of 10 per cent for the first half and a continuing improvement in EBIT to sales margin.
"The business finished the period with a clean inventory position and a strong cash position."
Chief executive officer Bernie Brookes described the results as "solid".
"This reflects a continued disciplined approach to running the business, an ongoing focus on cost control, and rigorous inventory management," Mr Brookes said.
"While sales in the December month were disappointing, the business performed very strongly in January and the stocktake sale was a great success."
Myer’s new store opening and refurbishment program, including the rebuild of Myer Melbourne and the development of new full-size stores in Top Ryde in NSW and Robina in Queensland are on track and progressing well, Mr Brookes said.
The strongest performing states were Victoria, NSW, South Australia, the ACT, and Tasmania.
All categories performed above last year, except for electrical, which benefited from last year’s government stimulus, Myer said.
Harvey Norman is due to release first half sales figures later today and JB Hi-Fi reports interim earnings early next week.
Both will tell us a lot about how December and the first half went for the consumer electronics sector.
