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Myer profits up as Australian retail back in fashion

English.news.cn   2013-03-14 12:40:14            

by Christian Edwards

SYDNEY, March 14 (Xinhua) -- Australia's retail fashion icon Myer released first-half figures Thursday, with a notable rise in profits suggesting the long-awaited return to style for Australia' s retail sector.

Myer's group sales were up 1.7 percent to 1.73 billion Australian dollars (1.78 billion U.S. dollars) in the 26 weeks to January 26 -- a 32-million-dollar gain on last year and pipping the expectations of market analysts.

The key net profit numbers also left behind the corresponding period by 0.7 percent at 87.9 million Australian dollars (90.47 million U.S. dollars).

In a note to media, Myer Chief Executive Officer Bernie Brooks said the results were certainly encouraging.

"We are pleased that the positive sales trend continued during the half, with the second quarter representing our third consecutive quarter of positive comparative store sales growth," Brooks said.

Still, the company said it remained cautious about the trading environment and doesn't intend to provide any profit or sales guidance for the full year.

UBS forecast Myer's upward movement after the leading Australian fashion retail store expanded margins by notably focusing on more lucrative in-house brands and backing away from tightly held electronics and white goods which have taken a hit from the growing online retail sector.

Myer's surprise interim dividend of 10 cents per share -- up from 9 cents last year -- came on the back of a 2.1 percent rise in second-quarter sales. By maintaining the 10 cent fully-franked credit despite estimates expecting a two cent fall, local investors will take this as another positive.

Evan Lucas, market analyst with IG Markets, said with the current retail conditions, the result is a strong turnaround.

"On face value this is a stellar result considering the conditions Myer has been trading in, and it is intriguing that the company has not provided guidance," he said.

"Guidance was also a major stock mover in earnings season as it gave investors a gauge to compare the company. However, considering the choppy nature of retail currently, this is a savvy move by Bernie Brooks as it will mean investors will have to base investment decisions on historical figures and broker estimates," Evans noted.

After a particularly gloomy recovery in Australia's post-global

financial crisis, two-speed economy, retail sales here surprised most analysts by rising sharply in January in the biggest monthly gain in more than eight months.

According to figures released by Australian Bureau of Statistics (ABS) earlier this month, January retail sales were up 0.9 percent from December, higher than the 0.4 percent increase expected by J.P. Morgan.

The Reserve Bank of Australia (RBA) has embarked on an extended run of rate cuts that have finally begun to percolate consumer confidence. The RBA has now slashed rates six consecutive times since November 2011.

Consumer sentiment has finally shown some signs of life this year, with Myer's results now implying that the limp Australian retail sector may find some breathing space as manufacturing and other former giants remain in the shadow of Australia's powerful resources industries.

Australian consumers have turned en masse to online retailing with almost 13 billion Australian dollars spent last year, according to the National Australia Bank (NAB).

What has been notable, according to analysts, is the share of domestic retailers who have out-muscled more well-known international brands to capture the lion's share of a growing spend.

Almost 75 percent of goods purchased online came from Australian-based companies.

The NAB Online Retail Sales Index shows overall online sales are growing fast, rising 27 percent in the year to January while traditional bricks and mortar sales grew only 0.4 per cent in the same period.

Editor: Lu Hui
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