Myer's full-year result slips

By a staff reporter

Myer Holdings Ltd expects the weak economic outlook and consumer confidence to challenge the business in the year ahead, after recording a slight decline in full-year profit.

At the 1015 AEST official market open, Myer shares were 3.3 per cent lower at $2.785, against a minor benchmark index lift of 0.02 per cent.

In the 52 weeks to July 27, Myer posted a net profit of $127.21 million, an 8.7 per cent decline on the previous year's $139.37 million.

The company said its cost of doing business had increased by 3.1 per cent to $1.01 billion in the year, while net profit was also  impacted by cost pressures associated with labour and occupancy (utilities, rates and taxes).

In the same period total sales revenue was $3.145 billion, a 0.8 per cent increase on the $3.119 billion recorded in the previous year.

The group will pay a fully-franked final dividend of eight cents, to be paid on November 14 to shareholders on the register at September 30.

Read Stephen Bartholomeusz's 'Myer's material alterations' here.

Myer chief executive officer Bernie Brookes said the year ahead will be one of great transition for the retailer, as it absorbs the impact of refurbishments to three major stores (Adelaide, Indooroopilly and Miranda) and confronts increased operating costs.

Mr Brookes said these costs include one-off costs relating to investment in Myer's omni-channel capability and store network optimisation initiatives.

"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."

Costs of doing business were expected to grow another four to five per cent, offsetting the benefits of sales growth and three new stores opening.

"As we move into fiscal year 2015 we expect to benefit from improved operating leverage and stronger fundamentals as a result of the completion of major refurbishments, the online business becoming profitable, and the ongoing optimisation of our store network," Myer said.

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

Myer takes full ownership of sass + bide

Separately, Myer announced it will take 100 per cent ownership of fashion label sass + bide.

Mr 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.