Millions in JobKeeper subsidies and rent waivers has helped struggling department store Myer grow its profits by 8 per cent for the first half of the financial year despite a plunge in sales.
Myer told investors on Wednesday its net profit after tax rose 8.4 per cent to $43 million, a better-than-expected result aided by $51 million worth of JobKeeper payments, almost half of which was a direct benefit to the company.
Myer has reported soaring profits off the back of JobKeeper payments.Credit:Getty
On a statutory level, which took into account impairments incurred in the prior corresponding half, profit rose 70 per cent. Earnings before interest, tax, depreciation and amortisation were largely flat on the prior corresponding half, down 1.7 per cent to $214.6 million.
The major department store chain also booked $15.8 million in rent concessions from landlords. This helped the company’s cost of doing business fall 21 per cent over the period.
Myer’s earnings did not grow in tandem with sales, however, as total revenue at the business fell 13.1 per cent to $1.4 billion due to reduced foot traffic in stores, many of which are placed in inner-city locations. Excluding these stores, comparable sales for the half rose 6.3 per cent.
Online sales were a bright spot for the business, rising 71 per cent to $287.6 million, representing 21 per cent of total sales. Chief executive John King said the company was one of the largest and fastest-growing online retailers in Australia.
“The first half result reflects several positive achievements including the continued strength of our online business, now representing 21 per cent of total sales, as well as sustained disciplined management of costs, cash and inventory,” Mr King said.
“We have now delivered five consecutive halves of reduced operating costs which, combined with a significantly improved balance sheet, has ensured the Company was able to withstand this challenging operating environment.”
Myer has been one of the retailers hardest hit by the pandemic due to many of its large-format stores being in CBD locations and the company’s online offering being generally weaker than many competitors.
The department store is currently in the midst of finding a new chairman after the company’s previous chair, Garry Hounsell, exited last year. Acting chair JoAnne Stephenson said a search was still underway.
“The board has undertaken a thorough search to find a new chairman and the search process is progressing well, with advanced discussions underway with preferred candidates,” she said.
“Relevant retail skills have been a priority in the search. We will update the market as soon as it is appropriate to do so.”
The company’s dividend remained suspended.
More to come
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