Myer half-year result reflects growing optimism
A rising tide of consumer confidence, swelled by strong jobs growth and low interest rates, looks to be dragging the retail sector out of its malaise as Myer posted a better than expected half-year profit.
Myer chief executive Bernie Brookes said the retail environment, although fragile, was showing signs of improvement.
The country's biggest department store is on track to ring up four consecutive quarters of comparable store sales growth for the first time since 2009 when its private equity owners were preparing for a float. "There are some good signs," Mr Brookes said as he unveiled an interim profit of $87.9 million, up 0.7 per cent, on a 1.7 per cent lift in sales to $1.73 billion.
Positive sales momentum had spilled into February from Christmas. "House prices are not declining, we have seen the equity market improved and that has certainly helped superannuation, unemployment levels [are] not getting worse and we have seen [low] interest rates ... so there are lots of good things that are impacting the consumer psyche," Mr Brookes said. Investors pushed Myer shares up 17¢ to $3.07.
Myer's upbeat assessment comes as labour force figures released on Thursday showed the unemployment rate steady at 5.4 per cent in February, and the largest monthly employment gain in 13 years.
But Mr Brookes, who will retire next year after leading the department store for eight years, warned there were still some events that could knock the economy down a notch and send consumers back to saving rather than spending.
"You have still got things like what happens with the debt in the US, issues with fragile European economies, right the way through what has been happening all over the world with mother nature ..." he said. "I don't think it's back to buoyant times ... we are not seeing ... people suddenly spending, we are seeing some signs of that, still reasonably fragile."
David Jones releases its first-half results next week, along with the Just Group, owner of Just Jeans and Portmans, and outdoor adventure retailer Kathmandu.
Myer was helped by a strong second-quarter performance that flowed from a solid Christmas and stocktake trading period, as well as improvements to its business via cost cutting and higher penetration of its Myer-owned brands.