Another Tumble for Myer Share Price

What caused Myer share price to drop?

Today Myer released its third profit warning since July.

In a first half 2018 results update, Myer announced another ‘deterioration’ in trading during the start of the second quarter, which followed their poor performance during the first.

The company advised its first half net profit would be between $37 million to $41 million before write-downs and restructuring costs, which is compared to $62.8 million in the first half of 2017.

Total sales for 1H 2018 were down 3.6%, with a drop in January sales of 6.5% and a disappointing stocktake sale.

Chief executive Richard Umbers pointed at competitors and internet shopping as the main reasons for the slump in profits, stating:

The significant deterioration in trading reflects ongoing challenging retail conditions with widespread industry discounting, a subdued performance of Myer’s stocktake sale and a continued shift in consumer behaviour characterised by reduced foot traffic and an increase in online shopping.

Shares crashed 10% early morning to a new low of 56.5c, and has only slightly recovered to 59c at time of writing.

Trouble on the horizon for Myer?

Myer’s balance sheet is home to almost $1 billion of intangibles including brand names and goodwill.

In recent news, South African retailer Woolworths wrote down David Jones’ value by $712 million, which could signal an impending write-down to come from Myer.

Further, Mr. Umbers indicated profit is not expected to improve in the second half of the year, and cited the volatile retail environment as the reason for being unable to produce a full year profit figure.

Suffice to say this news has come at a poor time, as markets across the world have taken a hit following the ~4% drop overnight on the Dow Jones.

At time of writing Myer Holdings Ltd [ASX:MYR] shares have fallen 53.6% since this time last year.

Regards,

Jack Cameron,
For Money Morning

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