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Online shopping pushes Myer pandemic profit boost

Business

Retailer Myer has posted a massive lift in interim profit after an online sales surge helped offset a fall in store shopping due to pandemic restrictions, helped along by $51 million in JobKeeper payments.

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Net profit for the first half of 2020/21 was $43 million, up 76.3 per cent, compared to the previous corresponding period.

Once restructuring costs, floor closures and brand exits are taken into account, the department store operator’s profit was still up by a healthy 8.4 per cent.

During the half-year, online sales rose 71 per cent to $287 million compared to a 13.1 per cent fall in total group sales of $1.4 billion.

Online sales now represented 21 per cent of Myer’s total sales, CEO John King said on Thursday.

“The strengthened balance sheet provides a solid platform for investing in our digital growth engine, which represents a significant opportunity,” he added.

While the impact of COVID-19 on the retailer’s business was undeniable, King said Myer was able to retain staff after getting $51 million from the federal government’s pandemic-driven JobKeeper wage subsidy program.

The money was paid out to workers in August and September.

Treasurer Josh Frydenberg says the Australian economy has been remarkably resilient as it recovers from last year’s recession and believes the government’s support measures have made a big difference.

But he admits the outlook could be “bumpy” when the JobKeeper wage subsidy ends in March.

“The Reserve Bank governor and the head of Treasury have spoken about the impact it may have on the labour market in the short term,”  Frydenberg told ABC radio on Thursday.

“But what we will continue to see over the course of the year is the steady trajectory and momentum with the recovery building, particularly as the vaccine is rolled out”

The December quarter national accounts released on Wednesday showed the economy grew by a stronger than expected 3.1 per cent after an upwardly revised 3.4 per cent in the September quarter.

It was the first time the national accounts had recorded two consecutive quarters of three per cent-plus growth in the 60-year history of the series.

Thursday’s figures for January retail sales and exports are expected to show such momentum continued into the early stages of the March quarter.

Consumer spending is expected to have grown 0.6 per cent in January, and a spritely 10.7 per cent rise over the year, in line with preliminary figures released by the Australian Bureau of Statistics last month.

Household spending was a key driver of the strong December quarter growth result.

“It’s households … that are out there spending because they’ve got confidence in the economy,” Frydenberg told the Nine network during his post-national accounts media blitz.

“As the vaccine rolls out, I think we will see more confidence across the economy.”

International trade figures for January are likely to see a surplus of over $6 billion, with export earnings rising four per cent due to higher commodity prices.

In particular, iron ore prices spiked on strong demand from China.

Other figures released this week included upbeat manufacturing and construction results, while strong job advertising points to further employment gains in coming months.

Low interest rates and government incentives have also seen house prices rise at their fastest pace since 2003 and demand for homes loans at a record high.

-with AAP

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