Myer share price: where next following interim results?

There was hope for a time that Myer (ASX: MYR) was on its way to turning itself around.

A quick look at the iconic department store’s recent share price moves however, suggests that investors have lost faith in that project somewhat: in the last six months the Myer share price has consistently unravelled, crashing ~45% in that period.

Prior to the open today, the stock traded for just 34 cents. And though it bounced 3% in the first thirty minutes of trade, expectations around the stock look decisively low.

This is of course not to say that everyone is pessimistic on Myer’s prospects. Heading into its H1, the renowned investment bank J.P. Morgan was Overweight the retailer, pegging Myer’s fair value at 75 cents per share.

Such a price target implies upside potential of over 100%.

Centrally, the investment bank posits that Myer is still a turnaround story, with J.P. analysts liking the retailer’s refreshed optimisation strategy. There’s valuation support too, management is competent and online represents a growth opportunity for the company.

Interim results in focus

All up, Myer looks to have delivered a solid set of results today. And though the company reported that total sales contracted 3.8%, to $1,607.9 million; comparable store sales rose, up 0.4% for the period.

For reference, these H1 sales figures were slighlty ahead of J.P.’s estimates.

Better still, Myer's online offering continues to gain traction, with online sales climbing 25.2% to $168.2 million – during the half.

Online sales now represent 10.5% of the retailer’s total sales.

'Pleasingly, there was continued strong growth in online sales, despite the exit of several low margin brands. During the period the online range was expanded, in particular in concessions, and checkout and Click & Collect were improved which combined to underpin the continued growth,’ Myer’s CEO said.

Positively as well, gross margins rose during the half, increasing 62 basis points to 39.14%.

On the bottom-line, earnings (EBITDA) came in at $113.1 million (-0.4%) against profits (NPAT) of $41.5 million (+0.4%). J.P. Morgan was projecting H1 profits of $41.6 million.

What do you make of Myer’s interim results: strong, weak, or somewhere in between? Trade accordingly. Click here to create an IG Trading Account today.

Myer share price: the outlook

Commenting on today's interim results, Myer's Chief Executive Officer and MD John King said:

'This result demonstrates our continued focus on profitable sales, a disciplined management of costs and cash and strengthening the balance sheet.'

Myer did indeed increase its cash position during the H1, with net cash rising by $65 million to $103 million.

Looking further out, Mr King said:

‘Myer anticipates the challenging macro environment will continue in the second half, and the ongoing impact of the Coronavirus on store traffic remains uncertain. The pace of change will therefore be managed in the best interests of customers and shareholders.’

It was however noted that:

‘Numerous opportunities remain to improve productivity and further reduce costs particularly in the areas of store occupancy, factory to customer and fulfilment for both stores and online.’

Watch this space.