Australia's Myer swings to profit, shares surge

Australian department store operator Myer Holdings Ltd swung back to an annual profit on Thursday as its turnaround strategy of ditching low-margin brands and a series of cost cuts showed investors that the high-street firm was back on track.

In the year since John King took over as Myer’s chief executive, he has overseen an overhaul of the department store by cutting jobs, the size of its stores and shifting focus towards high-margin brands.

Myer shares surged at the open, rising 7.9% to A$0.615, their highest level in nearly two months.

The 119-year-old firm reported profit of A$24.5 million ($16.6 million) for the year ended July 27, from a A$486 million loss a year earlier. It missed a forecast of A$31.8 million, according to Refinitiv data.

While the second half was forecast to be bumpier as Australia’s economy grows at its slowest pace in a decade, the series of changes helped Myer return to profitability in the first half of the year.

Total sales dropped 3.5% to A$2.99 billion, as it flagged weak consumer sentiment in the 2020 financial year.

“We anticipate the challenging macro environment and subdued consumer sentiment to continue during FY2020,” King said.

Online sales jumped 25.6%, supporting Myer’s push to beef up online store offerings as more customers move away from brick-and-mortar stores.