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Myer posts 5.2% profit slide, warns of more to come

Myer posts 5.2% profit slide, warns of more to come

Myer (ASX:MYR) has reported an 5.2% decline in net profit for 1H11, and warned it expects a similar decline for the second half.

Net profit including one-off items fell to $108.9 million for the half, on 3.5% lower sales revenue of $1.73 billion.

The department store chain said ebitda fell to $168.2 million from $180.5 million in 1H10, but operating gross profit margin improved to 40.54% from 39.63%.

Myer CEO Bernie Brookes said its performance had been impacted by “ongoing fragile consumer confidence and a highly competitive market with widespread discounting.”

Extra taxes, utilities, health care and petrol costs are contributing to the concerns, he said.

Electrical sales in particular shrank because of Myer's decision to exit whitegoods and retool its music business, as well as an ongoing price deflation of HDTVs and other entertainment items.

Brookes warned Myer is expecting an up to 5% decline in 2H profit, from a base of $169 million in 2H10.

But he said the retailer is “well placed to benefit from any increase in consumer confidence and discretionary spend when retail trading conditions improve.”

Despite the profit warning, MYR shares grew 3.23% to $3.200 by 3:30pm on Thursday.

But the shares are still trading well below their six-month high of $3.900.

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Tags myerGuidanceretailASX:MYRfinancial resultsBernie Brookes

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