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MYER'S half-year sales announced today have been described as "encouraging" by CEO and MD, Richard Umbers, but the retailer's shares fell 5.26 per cent on the ASX.
The market was unimpressed by a 5.3 per cent growth in profit to $62.8 million, compared to the previous corresponding period, as the company's sales declined by 0.6 per cent to $1.78 billion.
Second quarter sales, taking in the important Christmas and New Year period, were down 1.3 per cent to $1.07 billion.
Additionally, the Melbourne-based company's operating gross margin declined by 41 basis points to 38.3 per cent, but EBITDA increased by 2.7 per cent to $142.2 million and EBITDA margin increased by 25 basis points to 8 per cent.
Myer CEO and MD, Richard Umbers, says, the key trading periods of Spring Racing and Christmas were encouraging, but were offset by subdued sales during the Stocktake Sale.
"The improved profit result was achieved against a backdrop of aggressive competition with heavy discounting both before and after Christmas and patchy consumer confidence," says Umbers.
Umbers puts the poor stocktake performance down to Myer's strategy of reducing markdown dependency and the emergence of widespread discount fatigue among consumers.
In a preview to the full-year figures, Myer says sales in January and February were below expectations with January being the low point.
Based on the expectation that those conditions do not return, Myer still anticipates EBITDA growth to exceed sales growth in FY2017 and increased NPAT (pre and post implementation costs) over FY2016.
The business is 18 months into its five-year New Myer transformation and Umbers believes the final result will be a stronger company.
"We have made significant progress on our focus to deliver wanted brands and enhance customer service, and this work continues," says Umbers.
As part of the process, Myer will develop an improved omni-channel offer and a "productivity step-change".
Myer will pay an interim dividend of 3 cents per share full franked. The company finished today's trading at $1.08 per share.
Business News Australia
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