The Myer Holdings Ltd (ASX: MYR) share price is currently up by more than 12% after the department store retailer announced its FY21 result.
Myer’s FY21 report
The retailer reported that its FY21 total sales increased by 5.5% to $2.66 billion.
Myer pointed out that this was solid growth despite government-mandated store closures and travel restrictions, particularly in the first and last quarters of FY21.
Online sales played an important part of the overall result. Total online sales increased by 27.7% to $539.5 million. It now represents 20.3% of total sales.
The sales growth helped operating gross profit increased by 10.2% to $1.06 billion, with the margin rising 168 basis points (1.68%) to 39.7%.
Myer’s cost of doing business (CODB) only rose by 2% to $655.7 million.
The growth of sales rising faster than costs led to EBITDA (EBITDA explained) jumping 27.7% to $390 million. EBIT experienced an even bigger jump, rising 117% to $170.5 million. The EBIT margin surged 330 basis points (3.30%) to 6.40%.
Underlying net profit after tax was $51.7 million, a reversal from the net loss after tax of $13.4 million in FY20.
Statutory net profit after tax for FY21 was $46.4 million, up from a loss of $172.4 million last year.
The second half of FY21 saw EBIT of $61.5 million and net profit after tax (NPAT) of $8.8 million, representing the first profit achieved in the second half since FY17.
Other retail shares like Premier Investments Limited (ASX: PMV) are also seeing strong retail growth.
Management comments
Myer CEO and Managing Director John King said: “As we have consistently said over the past three years our focus has been on profitable sales, growing the online business, disciplined management of costs, cash and inventory, space optimisation and the deleveraging of our balance sheet. The successful execution of these, and many more strategic initiatives, has delivered solid growth across all our key metrics in FY21.”
Summary thoughts about the Myer share price
It’s no surprise to see Myer shares rise so much in reaction to this. A return to profitability is clearly a good thing.
According to the ASX, the market capitalisation of Myer is $419 million, putting it at around 9 times FY21’s profit. If it can grow profit again in FY22 then it would certainly seem to fit in that ‘value/cheap’ idea.
If Myer can continue to grow online sales and margins, then it may be a decent idea. It’s continuing its customer-focused strategy, which is working well.
However, trading remains “subdued” with lockdowns however there is a “strong” performance in both its online sales and non-lockdown stores which give the management hope for good trading after lockdowns end.
There may be other ASX growth shares with stronger sales growth potential.
