By Rishav Chatterjee
(Reuters) - Shares of Myer Holdings surged to an 11-month high on Tuesday, after the retailer defied market expectations around their first-half sales as it navigates the effect of a cost-of-living crisis.
The Australian department store forecast interim sales of A$1.83 billion (about $1.2 billion), which analysts said were better than feared, sending its shares up around 17.3% to A$0.78.
Australia's consumer stocks have failed to enthuse investors around their recovery, unlike other sectors have done over the past half-year, with market participants expecting a drag in both top and bottomline numbers for interim results.
"I think what we have seen today is a classic case of under-promising and then over-delivering, and the share price of Myer reacted accordingly by shooting higher," Tim Waterer, chief market analyst at KCM Trade, said.
Myer, which has been looking for a new company chief as boss John King plans to exit in June, said that the firm had to fight inflationary pressures and store closures which had an impact on profits.
The firm however flagged that consumers are expected to remain cautious in the second half of fiscal 2024 as the country's interest rates peak and customers dial back on luxury spending.
The A$1.83-billion sales forecast for the first half reflects a minor drop from previous year, but is about 14% above pre-COVID levels, Myer highlighted in a trading update on Tuesday.
"Investors were not holding particularly great hopes ahead of the trading update, so it was a pleasant surprise in terms of the sales figures, all things considered," KCM Trade's Waterer said.
($1 = 1.5401 Australian dollars)