Myer (MYR) has delivered its best start to a new financial year since 2006 while the company delivered its best 2nd half results since 2013 and the board even announced a 2.5c dividend – this household name has unfortunately probably been the ASX’s largest “dividend trap” of the last decade.
- MYR’s department sales grew almost 75% in the first 6 weeks of the fiscal year, a good indicator, net profit also rose 16.5% to $60.2mn.
- The board are understandably optimistic towards Christmas sales with basically full employment offsetting rising inflation pressures when it comes to retail spending – for now.
Moving forward the position of the consumer is obviously a precarious one as interest rates & energy bills rise but at least fuel and food prices are starting to offer some relief. Only a few days ago we received further confirmation that global consumers remain strong with iPhone orders beating expectations although they do have a habit of doing that! The key for us is mortgage stress, while this beast remains under control retail spending should be just fine.
- The Australian consumer is healthy today but investors remain concerned that a recession is on the horizon e.g. US bond spreads suggest it’s highly likely although how deep is another question that is very hard to answer.
MM likes MYR as an aggressive play under 65c
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