Why Are Myer Shares Rising?

What happened to the Myer share price?

Myer Holdings Limited [ASX:MYR] is an Australian department store. Myer has 67 stores across Australia. Its range includes men’s, women’s and children’s fashion apparel, homewares, cosmetics, furniture and electrical goods.

Shares in Myer were 1.75% higher at the time of writing (1pm AEST).

Why did Myer shares do this?

Myer shares have been steadily rising since mid-February, when South African-owned department store David Jones announced that first half sales were up 11% compared to the same period last year.

Myer shares have rallied from $1.00 to around $1.16 per share. It appears investors think David Jones’ increased turnover will show up in Myer’s first half results, due out in two weeks.

Myer is six months into its massive $600 million, five-year turnaround strategy. The Myer bounce back plan so far has included bumping up staff numbers. Of the 3000 Christmas and Boxing Day casual staff that hired, roughly three quarters were kept on.

Myer — like Officeworks, Target, SurfStich and Kathmandu — now has an eBay ‘shopfront’ in a bid to attract more overseas customers. The chief digital and data officer, Mark Cripsey, says it’s about taking the product to where the customers are, rather than waiting for them to come to Myer.

Not only that, Myer is dumping private labels in favour of ‘wanted brands’. This is the opposite strategy to David Jones, which is aiming for higher-margin private label brands to comprise 20% of its entire product range.

What now for Myer?

When Myer debuted, the initial public offering was for $4.10, giving the retailer a market cap of $2.33 billion. Myer is now worth $933 million.

The big question is, will this turnaround strategy for Myer work?

I reckon it’s too early to tell. The first half financial results may reflect consumer spending patterns, rather than any behind-the-scene changes.

However, with new blood coming in last year, I believe the transition to a better company is on its way. It will be another 12 months before it shows up in the share price though.

Shae Russell,
Money Morning

Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Port Phillip Publishing eight years ago, Shae has worked across a number of publications, such as Australian Small-Cap Investigator, Gold Stock Trader and Microcap Trader. She’s spent the past two years however, honing her macro analysis skills alongside Jim Rickards, showing Australians how to invest and profit form global macro trends.

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

Money Morning Australia