Factors Contributing to The Decline in Myer Holdings Share Price

The decline in Myer Holdings Limited's (ASX: MYR) share price can be attributed to various factors outlined in the recent trading update and guidance provided for the 52 weeks to 29 July 2023 (FY23). Despite a positive outlook, with FY23 Total Sales up 12.5% in FY22 and 12.4% in FY19 (pre-COVID), the company faced challenges during the second half of FY23.

Throughout 2H23, Myer encountered deteriorating trading conditions that affected the growth in Total Sales, albeit still showing a modest increase of 0.4% compared to 2H22. However, compared to the more stable trading conditions 2H19, the growth rate was more significant at 11.9%.

Notably, Group online sales during FY23 faced headwinds and declined by 4.5% to AU$690.5 million. This decline was primarily attributed to the favourable impact of store closures during 1H22. Nevertheless, Group online sales remained a significant portion of total sales, accounting for 20.5%. Compared to FY19, online sales saw a substantial increase of 163.2%, demonstrating the company's digital growth potential.

The expected profit growth for FY23 was also impacted by macroeconomic headwinds that affected sales, margins, and Costs of Doing Business. Despite these challenges, the company projected 2H23 Net Profit After Tax (NPAT) to range between AU$4 million and AU$8 million. Moreover, FY23 NPAT was estimated to be between AU$69 million and AU$73 million, indicating an increase of 15% to 21% compared to FY22.

Myer also anticipated recording Individually Significant Items and Implementation Costs, which may have further impacted profitability. These costs could include expenses related to store and distribution center exits, affecting the company's financial performance.

Finally, the announcement of the retirement of CEO and Managing Director John King in 2024 may have added to investor uncertainty and affected the share price. The Board's engagement of search firm Egon Zehnder for the CEO replacement process was likely seen as an additional challenge for the company during this period.

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