By Archishma Iyer
(Reuters) – Shares of Myer Holdings on Tuesday were on track for their worst day in nearly three years, if trend holds, following the Australian retailer’s forecast of a weaker-than-expected net profit after tax for the fiscal year 2023.
Shares of the company tanked as much as 15.5% to A$0.600, set for their worst day since Sept 10, 2020. The stock touched its lowest level in two weeks.
Myer expects its full-year net profit after tax to be between A$69 million ($45.33 million) and A$73 million, missing a Refinitiv forecast of A$88.5 million, even as it is an increase in the range of 15% to 21% on FY22.
The trading update points towards a difficult period for Australian retailers, which are due to report their earnings this week as companies struggle with lacklustre macro-economic conditions, affecting their sales and profit margins.
Australian retail sales volumes had fallen in the June quarter as the cost-of-living crisis and rising borrowing costs hurt consumer sentiment and revealed weaker economic growth.
“We continue to tightly manage costs, inventory and cash to ensure we have a strong balance sheet as we begin FY24 where we expect the ongoing uncertainty around the macroeconomic environment to persist,” Chief Executive Officer John King said in a press statement.
Morningstar analyst Johannes Faul estimated that full-year net profit would arrive at A$93 million, with the midpoint of the forecast at A$71 million.
“Consumer discretionary spending in general has folded down quite dramatically in Australia and that’s really on the back of the central bank here in Australia tightening monetary policy,” Faul said.
The Reserve Bank of Australia has hiked its key policy interest rates by 400 basis points over the past 16 months, with another rate raise in the cards in the next quarter, in what could be the central bank’s last hike this year.
The company’s full-year total sales, however, rose 12.5% to A$3,362.9 million.
($1 = 1.5221 Australian dollars)
(Reporting by Archishma Iyer in Bengaluru; Editing by Sherry Jacob-Phillips)