The cost of floating on the ASX has resulted in Myer posted a depressing 74.4% decline in first-half profit.
Profit for the period fell from $83.2 million to $21.3 million. On the other hand, if the IPO expenses are taken out, Myer actually increased profit by 38% and increased revenue by $1.8 billion. Not bad going.
Myer Holdings
ASX Code: MYR
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Myer is expecting a happy Christmas and a happier new year, judging by Bernie Brooks’ comments yesterday.
Yesterday the Myer chief executive said the retail industry, slowly recovering from the GFC, is anticipating shoppers will be frugal this Christmas. He did note however that sales of gift cards are up 40%, suggesting people will be out in force in the post-Christmas stocktake sales.
On the subject of interest rates, he said Myer would be unaffected by this week’s rise, but another two-three per cent increase could cause a dent in retail sales.
The Australian Bureau of Statistics has said national retail spending rose 0.3% in October, to almost $20 billion. Myer, David Jones and food retailers have been the primary beneficiaries.
Myer Holdings
ASX Code: MYR
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Herald Sun: “Myer chief Bernie Brooks warns of festive frugality for Myer”
It comes as no surprise that demand for Myer shares has been strong.
Demand for stock by retail stockbrokers on behalf of their clients has exceeded the size of the entire IPO, and allocations have had to be scaled back.
Part two of the retail offer kicks off today, with Myer’s 14,000 staff and more than 3 million Myer One loyalty card holders now able to lodge applications to buy shares.
As the only members of the public with access to apply for shares, there has been a rush to sign up for Myer One membership in recent weeks. Silver and Gold-level Myer One members are guaranteed to receive stock.
The retail offer component will close on October 23. The final share price will be determined after the institutional book-build on October 29-29, ahead of the November 2 listing.
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Myer has confirmed it will get the ball rolling on pre-registration for its public float, after releasing some strong earnings results yesterday.
Profits were up 15% to $109 million, beyond expectations.
The public float of Myer has been highly anticipated, and along with carsales.com is expected to be among the major profile floats of the year.
Carsales.com had a strong debut yesterday, and this performance, along with the rising sharemarket, is expected to encourage those companies which shelved their float plans during the worst of the economic crisis.
There are some reports that Myer will require shareholders to sign up to the Myer One loyalty program, in an effort to increase the customer base. There is also speculation that existing Myer One members will receive preferential treatment during the float.
400 senior managers have already been issued shares under the employee scheme.
A prospectus is due to be lodged around September 28.
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Discount department stores are emerging as winners from the GFC, as shoppers seek out cheaper shopping alternatives and look for better value when spending their government stimulus package payments.
Wesfarmers is seeing the benefits in their Kmart and Target sales figures, which are outperforming the more upmarket stores like Myer and David Jones. Woolworths Big W stores have also seen positive growth in the last quarter.
The trend is also being seen in the US, where Wal-Mart has reported a growing proportion of its demographic are shoppers on higher incomes, and 17% of the recent growth in store traffic is coming from new customers. The Wal-Mart chief believes the economic downturn has brought about a favourable change in consumer attitudes to discount stores, and in the types of products they are likely to buy.
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