The Myer Holdings Ltd (ASX: MYR) share price has gone nuts. It’s up more than 20% after giving investors an update.
Myer is one of the ASX’s oldest retailers as a department store operator. But it’s also working hard on growing profit.
Myer’s strong FY22 update
It gave a trading update and results guidance for the 52 weeks to 30 July 2022.
Sales
Myer boasted that sales growth momentum had continued into the FY22 second half. Total second half sales were up between 16.5% to 17.3% compared to the second half of FY21.
FY22 total sales went up by between 12.3% to 12.7%, to between $2.99 billion and $3 billion (in 52 weeks in FY22), compared to $2.66 billion in FY21 (which was 53 weeks).
Myer’s total online sales went up between 32.5% to 34.4%, compared to FY21. This represented approximately 24% of total sales, representing sales of between $715 million to $725 million.
Profit expectations
Myer revealed that the FY22 second half net profit for the 26 weeks to 30 July 2022 is expected to be between $23 million and $28 million. That’s an increase of between 160% to 217%, compared to $8.8 million for the 27 weeks to 31 July 2021.
Total net profit for FY22 is expected to be between $55 million and $60 million. That represents an increase of between 86% to 103% if jobkeeper is excluded from the prior year. The FY21 result included jobkeeper support of $22 million after tax.
Myer said it expects to finish FY22 with a net cash balance of more than $155 million, up from $112 million in FY21.
The department store stock on hand is currently 9.6% higher than the same time last year, mainly reflecting “acceleration of intake” in response to global supply chain delays.
Management comments
The Myer CEO John King said:
Execution of the customer first plan continues to deliver positive outcomes for the business with all categories achieving sales growth over FY21, despite more trading days lost due to COVID this year.
The momentum in the second half in terms of sales growth both in-store and online, profitability and strengthening of our balance sheet places us well as we go into the new financial year.
Summary thoughts on the Myer share price
The ASX retail share still looks cheap on a price/earnings ratio (p/e ratio) basis considering the business has made at least $55 million of net profit in FY22.
If it can keep growing profit from here then it could be an opportunity for investors who like looking at unloved ideas. It’s not one I’m personally looking to buy, but the CEO John King seems to have done a good job. Profitable sales are important.
