Department store Myer has posted a big increase in annual profits after receiving more than $100 million in JobKeeper subsidies during 2020.
The retailer reported a $51.7 million after-tax profit for the the 2020-21 financial year on Thursday, up from a $13.4 million loss in the prior year.
It was fuelled by about $51 million in net JobKeeper support and rent waivers during the year ending July 31 – support Myer has yet to return.
Myer took $117 million in JobKeeper between last April and September.
Chief executive John King said Myer’s surging profits reflected changes to its strategy to focus on shoppers, with a record 83 per cent average customer satisfaction score achieved over the past year.
“Customer service is critical and our store team members have delivered outstanding service in challenging circumstances,” he said.
“The business is well placed ahead of the upcoming peak trading period and the team are focused on remaining agile in response to various state-based lockdowns and travel restrictions.”
Myer said it is “closely monitoring” supply chain disruptions heading into Christmas, amid warnings that skyrocketing freight prices are going to create shortages over the holiday period.
“We are well stocked, have developed a strong promotional plan and will leverage a more engaged customer base [over Christmas],” Myer said.
Myer’s total sales rose 5.5 per cent to $2.6 billion, held back by store closures during lockdowns, which cost the company 2000 trading days.
Comparable sales across Myer’s CBD stores fell by 22.3 per cent, but online sales rose 27.7 per cent to $539 million over the financial year.
The bumper profit and sales growth will bolster Myer’s position against disgruntled investor Solomon Lew, who wants to overthrow the board.
Mr Lew, who runs Myer’s competitor and supplier Premier Investments, has been trying to install his allies on Myer’s board for several years.
Myer has been trying to slim down its business to improve performance since 2019 and last year closed 42,000 square metres of floor space.
“Our focus has been on profitable sales, growing the online business, disciplined management of costs, cash and inventory,” Mr King said.
Myer’s earnings news included a decision to give acting chairman and former KPMG client partner JoAnne Stephenson the role permanently.
Shareholders will not be paid a dividend due to uncertainty about the lockdowns affecting the ACT, NSW and Victoria.
Myer shares on the ASX were up 7.84 per cent to 55 cents at 11.36AM.