This 2023 reporting season the outlook is just as important as the results – just ask Myer (ASX:MYR)

Nick Sundich Nick Sundich, August 8, 2023

It is still early this 2023 reporting season on the ASX but there was an important lesson from Myer’s (ASX:MYR) update this morning. That the outlook is just as important as the result.

 

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Myer expecting profit growth this 2023 reporting season

Myer didn’t release its statutory results this morning, just guidance on the expected results given it uses an August-July financial year for some reason. But investor reaction was just as strong as if it was the company’s actual results.

The company is expecting to report $3.4bn in total sales, up 12.5% and an NPAT of $69-$73m (up 15-21%) in FY22. Specifically during the second half, total sales were up 0.4% compared to 12 months ago. Nonetheless, shares in Myer fell over 10% this morning.

 

Myer (ASX:MYR) share price chart, log scale (Source: TradingView)

 

The devil lay in some of the details that hinted things got worse in the last few months of the financial year. And as we’ve seen with other retail stocks in recent months, the sight that things are getting glum leads shareholders to fear worse is to come.

For the second half, Myer’s NPAT was just $4-8m. The company’s net cash position fell from $186m to $120m. Clearance inventory was 8% of current department store stock on hand, up from 5.8% 12 months ago.

CEO John King declared,’ Myer’s Customer First Plan has continued to deliver both positive sales growth and positive profit growth in FY23, despite the prevailing macroeconomic headwinds that have buffeted the retail sector throughout the second half’.

 

The outlook is as important as the result

Myer’s boss isn’t wrong there, but will he be crowing the same in 12 months’ time when the company next reports full year results? If investor reaction is any guide, investors think there’s not much of a chance.

Even if the situation has improved, bad retail sentiment for the next few months may well be enough to make next reporting season a more difficult one for Myer – and perhaps for its retail peers as well.

So if you’re wondering why your company has declined despite recording sales and/or profit growth this reporting season…perhaps it is because the outlook indicates that FY24 won’t be so good.

 

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