The Myer Holdings Ltd (ASX: MYR) share price has sunk after the ASX share revealed ongoing sales growth in the FY23 second half, but the CEO is retiring.
Myer is a department store retailer, with a growing online shopping presence.
FY23 sales update
In what I’d describe as very interesting given the higher interest rate environment, Myer has reported that for the 52 weeks to 29 July 2023, its FY23 second half total sales were up 0.4% on the second half of FY22, despite deteriorating trading conditions during the half.
Those second half sales were up 11.9% on the second half of FY19. This brings FY23 total sales to $3.36 billion, an increase of 12.5% and up 12.4% on FY19.
Now that the company isn’t comparing year on year to COVID-impacted periods, it revealed that it returned to online sales growth of 3.2% in the second half of FY23, up from the FY22 second half. However, FY23 total online sales were down 4.5% to $690.5 million. This represented 20.5% of total sales and total online sales were up 163% compared to FY19.
Profit growth
Myer also said that it is expecting to report that it generated net profit after tax (NPAT) of between $4 million and $8 million in the FY23 second half, despite the “prevailing headwinds generated from the macroeconomic environment affecting sales, margin and costs of doing business.”
FY23 underlying total net profit is expected to be between $69 million and $73 million, which would represent an increase of between 15% to 21% on FY22. Profit (growth) is essential to support and grow the Myer share price.
However, the statutory profit result is expected to include ‘significant items and implementation costs’, including store and distribution centre exit costs.
Balance sheet
Myer also revealed that it expects to show that it had net cash of $120 million at the end of FY23, with inventory flat compared to the same time last year, reflecting “well controlled intake in response to tightening trading conditions.”
Clearance inventory was 8% of current department stock on hand, compared to 5.8% at the end of FY22. A further increase of this could spell difficulty for the Myer share price if it has to heavily discount more products to sell them.
CEO
Myer also announced that CEO and Managing Director John King is going to retire in 2024.
King said:
Myer’s customer first plan has continued to deliver both positive sales growth and positive profit growth in FY23, despite the prevailing macroeconomic headwinds that have buffeted the retail sector throughout the second half.
We continue to tightly manage costs, inventory and cash to ensure we have a strong balance sheet as we begin FY24 where we expect the ongoing uncertainty around the macroeconomic environment to persist.
Final thoughts on the Myer share price
John King has seemingly been integral to the turnaround that Myer has seen over the past five years. But, without him at the helm, will the ASX retail share be able to keep up the good work? I wouldn’t bet on it, but hopefully Myer can prove the doubters wrong.
The market doesn’t seem convinced, and I’m not sure about future success either, particularly if households reduce their spending at places like Myer.
