Myer profit down
Department store owner Myer’s full year net profit has fallen 8.7 per cent to $127.2 million.
The result came on the back of higher selling expenses.
Sales revenue for the year grew nearly 1.0 per cent to $3.14 billion.
The company declared a final dividend of 8.0 cents a share, fully-franked, down on last year’s 9.0 cents.
Myer also announced today it has moved to take full ownership of successful fashion brand sass + bide.
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Myer chief executive officer Bernie Brookes said the year ahead will be one of great transition for the retailer.
“We remain cautious about the year ahead given the challenges of the economic outlook and consumer confidence.
“During FY2014 the business will transition through the impact of the major refurbishment of three of our top 20 stores (Adelaide, Indooroopilly and Miranda) and face increased operating costs,” Brookes said in a statement to the stock exchange.
“These will predominantly impact the first half, resulting in a material difference in the company’s performance between the first half and second half compared to fiscal 2013, with the trend improving moving into fiscal 2015.”
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Separately, Myer announced it will take 100 per cent ownership of fashion label sass + bide.
Brookes said the brand had achieved double-digit sales and profit growth in fiscal 2013.
“Since Myer acquired a 65 percent stake in the business in February 2011, sass & bide has delivered a consistently strong performance, growing sales by 45 percent and profit by 112 percent over the period,” he said.
Myer said the purchase price is estimated at approximately $30 million and will be funded through existing facilities and cash flow.
“We enjoy a very positive relationship with sass & bide founders, Heidi Middleton and Sarah-Jane Clarke, as well as David Briskin and are pleased that they will remain involved in the business. sass & bide will retain its autonomy of management and most importantly, of design.”
Invast chief market analyst Peter Esho said Myer would struggle to maintain its dividend and attractiveness to investors until it grew earnings.
Overall, there was not enough good news in the results to help offset the overarching challenges, he said.
“For Myer, revenue continues to be the major problem,” he said.
Guidance for 2014 was fairly downbeat with sales sluggish and the cost of doing business to rise, he said.
“For Myer to grow its revenue and maintain its earnings it needs to continue investing in its stores so shoppers flow through … this comes at a cash cost,” Esho said.
– with AAP
