-Australia's Myer back in black, shares jump
(Corrects share milestone in third bullet and sixth par from
six-month high to four-month high)
* Myer swings to half-year profit amid turnaround
* Sales continue to fall, dropping 2.8 pct
* Shares hit four-month high
By Tom Westbrook
SYDNEY, March 6 (Reuters) - Embattled Australian department
store operator Myer Holdings Ltd returned to
profitability in the first half as a turnaround strategy focused
on cutting floorspace and shedding low-margin brands gained
traction, lifting its shares sharply.
But a slide in sales at the country's biggest department
store chain, where they have been falling for two-and-a-half
years, and a forecast for a bumpy second half are further signs
of a softening broader economy.
Australia's retailers have been hammered as a downturn in
property prices has consumers saving more and spending less,
pushing the country's fourth-quarter GDP below forecasts and
prompting the central bank to weigh an interest rate cut.
Investors however welcomed Myer's results, pointing to the
slower sales fall than the previous quarter and healthy growth
"To me it's a lot of positive steps in the right direction
in an environment which is difficult," said Geoff Wilson, chief
investment officer at Wilson Asset Management, Myer's
Myer shares jumped as much as 20 percent in early trade to
their highest since October, while the broader market
rose 0.2 percent.
HIGH STREET HITS BACK
The 119-year-old firm is emblematic in Australia of the
struggle of traditional department stores to adapt to the rise
of online shopping and the arrival of offshore competitors like
H & M Hennes & Mauritz AB.
Its return to profit followed a run of profit warnings,
impairment charges, executive departures and a plunging share
The company posted net profit of A$38.4 million ($27.2
million) for the six months to Jan. 26, compared with a loss of
A$476.2 million for the same period a year earlier.
"We feel this result is a small step in the right direction,
but we are highly conscious that the heavy lifting is still
ahead of us," Myer Chief Financial Officer Nigel Chadwick told
investors on a conference call.
John King, who began as chief executive in June, said the
company would be shrinking the size of its stores, discounting
less and switching to higher-margin brands in the second half,
which would disrupt sales.
Total sales fell 2.8 percent during the period to A$1.67
billion and the Melbourne-based company declared no interim
dividend after suspending it last year.
The result follows a 28.8 percent slide in half-year
operating profit at its biggest rival, David Jones, a division
of South Africa's Woolworths Holdings Ltd.
Fallout from Australia's real-estate downturn has hit
earnings across the economy, crimping sales at grocers, building
suppliers, advertisers, mechanics and developers.
($1 = 1.4116 Australian dollars)
(Reporting by Tom Westbrook in SYDNEY. Additional reporting by
Shanima A and Aditya Soni in Bengaluru;
Editing by Phil Berlowitz and Stephen Coates)
First Published: 2019-03-06 00:28:48
Updated 2019-03-06 03:12:24
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