It needed to. The company posted a 13 per cent fall in sales - a figure that would have been worse but for some help from a shift to online.

Loading

In a general sense it is difficult to read too much into Myer’s performance given trading was so significantly upset by COVID-19.

Having said that, retail stocks in general have had their best half-year performances in years in the six months to December or January as the billions of dollars in government stimulus have resulted in frenzied purchasing of goods. And this retail splurge was magnified because COVID limited consumer’s ability to spend on services such as travel, accommodation and restaurants.

Myer caught a bit of this consumer wave in its suburban and regional store sales (where sales grew 6.3 per cent) but nothing like the spending tsunami that hit some of its competitors.

Wesfarmers’ Kmart division (which also includes Target) increased profit by 42 per cent, while Big W’s profit surged ahead by 166 per cent after a 20 per cent improvement in sales.

Lew’s Premier Investments has already forecast it will near-double its profit in the half year to January 2021 while Harvey Norman managed to more than double profit in the half to December.

The combined effects of store closures, particularly in Melbourne and the desertion of its CBD, hit Myer disproportionately. Traditionally CBD stores have dominated profits.

Myer’s move to batten down the hatches on costs and expenditure allowed it to improve cash flow and undertake some balance sheet repair.

The other feature of many discretionary retail performances has been an improvement in gross profit because strong consumer demand has negated the need for discounting.

Unfortunately this appears to be another positive trend that Myer missed. Its gross margin fell as it cleared stock from stores in an attempt to reduce old inventory and struggled with being able to move stock between locations due to COVID.

While Myer’s financial performance for the six months doesn’t match the successes delivered by other retailers, it can boast about its improved balance sheet. Myer’s move to batten down the hatches on costs and expenditure allowed it to improve cash flow and undertake some balance sheet repair.

This was one element of Myer’s performance that impressed Citi analyst Bryan Raymond.

“Free cash flow improved by 29 per cent year on year to $273 million as inventory and capex [capital expenditure] declines boosted net cash to $201 million, up from $148 million in first half 2020, he said in a note to investors.

He also said Myer didn’t need to dip into its working capital facility during the period.

Certainly a more robust balance sheet will relieve any pressure from lenders. The same can’t be said about pressure from Lew.