Myer returns to profit but keeps dividend on hold as lockdowns hit sales

Under-fire department store Myer will keep its dividend suspended despite posting a $51 million return to profit as the extended pandemic lockdowns in Sydney and Melbourne weigh on its sales.

The retailer told investors on Thursday morning it won’t resume dividend payouts despite reporting its best result in four years, with sales up 5.5 per cent to $2.65 billion and net profit jumping nearly fivefold to $51.7 million in the 2021 financial year. Myer has not paid a dividend since 2018.

Myer received $50.7 million in JobKeeper payments and New Zealand’s wage subsidy during the year, of which $19.1 million was paid to workers. Without those subsidies, its net profit would have been $29.6 million.

Myer CEO John King says the result was achieved despite the lockdowns and store closures. Credit:

The full-year profit came in ahead of the company’s own forecast given to shareholders in August. Online sales grew 27.7 per cent to $539.5 million, now representing more than a fifth of its total sales.

However, while the retailer did not provide any material outlook for investors, it warned that sales “remained subdued” because of the COVID lockdowns in Sydney and Melbourne, though it stressed the company was well-placed for the eventual re-opening of its stores and the Christmas period.

Chief executive John King said the latest result was a testament to the business’ strength during the pandemic and a demonstration that its growth-focused ‘Customer First’ plan was getting traction.

“Despite the on-again off-again nature of physical retail over [the past financial year], when combined with continued growth in the online business we delivered solid sales growth when not impacted by lockdowns,” he said.

“As we have consistently said over the past three years, our focus has been on profitable sales, growing the online business, disciplined management of costs, cash, and inventory, space optimisation and the deleveraging of our balance sheet.

“The successful execution of these, and many more strategic initiatives, has delivered solid growth across all our key metrics.”

Myer has been the target of a fierce campaign by its largest shareholder, billionaire Solomon Lew, who has been pushing for the resignation of Myer’s board due to the company’s history of underperformance.

Mr Lew acquired a 15.7 per cent stake in the business earlier this year in an attempt to rejig the board and add two of his own directors and a raft of new independent directors.

Despite this, Myer announced on Thursday it will seek to appoint the chair of troubled health and beauty retailer McPherson’s, Ari Mervis, as a new director. It also announced that after nearly 12 months searching for an external candidate, Myer’s acting chair JoAnne Stephenson would take on the role permanently.

More to come.

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