Australia's Myer Holdings set for worst day since Sept 2020 on FY outlook

Myer Holdings

08/08/2023 02:59

By Archishma Iyer
       Aug 8 (Reuters) - Shares of Myer Holdings  MYR.AX  on
Tuesday were on track for their worst day in nearly three years,
if trend holds, following the Australian retailer's forecast of
a weaker-than-expected net profit after tax for the fiscal year
2023. 
    Shares of the company tanked as much as 15.5% to A$0.600,
set for their worst day since Sept 10, 2020. The stock touched
its lowest level in two weeks. 
    Myer expects its full-year net profit after tax to be
between A$69 million ($45.33 million) and A$73 million, missing
a Refinitiv forecast of A$88.5 million, even as it is an
increase in the range of 15% to 21% on FY22.
    The trading update points towards a difficult period for
Australian retailers, which are due to report their earnings
this week as companies struggle with lacklustre macro-economic
conditions, affecting their sales and profit margins. 
     Australian retail sales volumes had fallen in the June
quarter as the cost-of-living crisis and rising borrowing costs
hurt consumer sentiment and revealed weaker economic growth.
 urn:newsml:reuters.com:*:nL1N39K03H 
    "We continue to tightly manage costs, inventory and cash to
ensure we have a strong balance sheet as we begin FY24 where we
expect the ongoing uncertainty around the macroeconomic
environment to persist," Chief Executive Officer John King said
in a press statement. 
    Morningstar analyst Johannes Faul estimated that full-year
net profit would arrive at A$93 million, with the midpoint of
the forecast at A$71 million. 
    "Consumer discretionary spending in general has folded down
quite dramatically in Australia and that's really on the back of
the central bank here in Australia tightening monetary policy,"
Faul said. 
    The Reserve Bank of Australia has hiked its key policy
interest rates by 400 basis points over the past 16 months, with
another rate raise in the cards in the next quarter, in what
could be the central bank's last hike this year. 
    The company's full-year total sales, however, rose 12.5% to
A$3,362.9 million. 
       
     ($1 = 1.5221 Australian dollars)

 (Reporting by Archishma Iyer in Bengaluru; Editing by Sherry
Jacob-Phillips)
 ((Archishma.Iyer@thomsonreuters.com;))