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Myer shares hit hard after disappointing first half profits

Myer shares hit hard after disappointing first half profits
Mar 19, 2015 By Simon Herrmann

The department store chain Myer Holdings Limited (ASX:MYR) has reported a 23 per cent decline in first half profits today. The market has reacted by pushing shares of MYR down 14.8c, or 9.67 per cent, to $1.38 per share so far today. The company reported a first half profit of $62.2m, which came in significantly lower than the $80.8m profit of last year. Myer also cut its full year profit guidance to between $75m and $80m, missing analyst’s projections by about $10m. Myer failed to revise its guidance after recently announcing Richard Umbers as a replacement for the former and long-time CEO Bernie Brookes. However, Mr. Umbers defends the company’s decision by citing the weak sales in February, which were unknown during the leadership transition.

Shares of Myer have been struggling for several years. MYR received a brief boost during the ASX rally earlier this year and even though the underlining share price is flat so far this year, it is still trading near all-time lows. MYR’s one-year return has faired even worse and is down about 47.86 per cent. The company has cited weak consumer confidence and the falling value of the Australian dollar as contributing factors to disappointing profits. “As the dollar falls it isn't always possible to pass those costs on in terms of price," chief executive Umbers said. The new chief executive has vowed to overhaul the company amid this troubling period. “The new Myer has to be different, it has to look and feel different for the future,” he said. As profit margins continue to fall, so too does the share price of MYR. Myer also cut its fully franked interim dividend from nine cents to seven cents one year ago.

 

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Simon Herrmann Author: Simon Herrmann Mar 19, 2015

Simon is a financial analyst at independent research firm Wise-owl who wants to change the world by disrupting the cliché approach to investment decision making with convergent thinking. Wise-owl’s goal is plain and simple: Find the best opportunities for our members by following a proven methodology and to create long-term value through high-quality advice, innovation, technology and education. We combine industry experience and the agile mentality of a start-up. Wise-owl is the future of stock market investing.

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