Myer profit jumps 40%

Department store chain Myer has shrugged off concerns about the weakening retail environment to post a 40% increase in profit for 2007-08.

Department store chain Myer has shrugged off concerns about the weakening retail environment to post a 40% increase in profit for 2007-08.

This morning, the unlisted retail giant reported net profit for fiscal 2008 of $93.579 million, up from $73.432 million in the prior year.

Myer’s total sales grew slightly during the period, up from $3.29 billion to $3.32 billion, but the company was able to cut costs by 2.8% to $1.057 billion. Comparable store sales were up 2%.

The company has warned that retail conditions in 2008-09 will be tough and the company expects to post a similar profit to this year. But as managing director Bernie Brooks said, that would still be a pretty good result.

“Given the prevailing economic conditions and the impact on earnings of current refurbishments, our expectation that fiscal 2008 profits can be maintained in fiscal 2009 reflects our confidence in the underlying business, including our ability to continue to drive business improvements,” Brooks said in a statement.

While the next 12 months will be tough, Myer is bullish about its medium-term outlook and has boldly predicted that it is “on track to deliver improved profitability with (earnings before interest and tax) of seven cents in the dollar by mid-2010”, compared to the current rate of around four cents in the dollar.

Myer Group executive chairman Bill Wavish described the company’s performance as “solid”.

“Cash flow and profitability have both improved, providing us with a stronger platform for capital investment in the business. Despite current difficult retail trading conditions, we are on track to achieve the economic performance to underpin long term sustainable investment and growth.”

The company was able to reduce debt during the period and its next debt repayment is now four years away – a big advantage, given current conditions in credit markets.

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