Myer Holdings Ltd

MYR Details
Lower than expected sales to impact the result: Myer Holdings Ltd (ASX: MYR) tumbled 9.5% on May 08, 2017, to a low level from late April 2017, and has been witnessing challenges post the announcement of weakened FY17 outlook with lower sales experienced at the start of the year. Further, market sentiments seem to be dipping at the back of more competition evolving from the entry of Amazon and TK Maxx into the Australian market. Recently, global e-commerce giant Amazon announced that it will open online shop front service in Australia, which will increase the pressure on the domestic retail sector to catch up with the digital economy.  Further, the concerns grew in recent months when Amazon registered hundreds of trademarks in the country and announced additional investments. Meanwhile, Premier Investments Ltd (PMV) has made a strategic investment of 10.7% in MYR.

Recommendation: The stock has declined by 10.16% over the past three months as on May 05, 2017 in the anticipation of increasing competition with Amazon’s entry.We give an “Expensive” recommendation on the stock at the current price of $ 1.00

Super Retail Group Ltd

SUL Details
Fall despite decent trading update:Super Retail Group Ltd (ASX: SUL) stock declined 4.7% on May 08, 2017. The group reported that its Auto retailing and Sports retailing divisions witnessed year on year like-for-like growth of 2.5% and 1.5% for 17 weeks to 29, April 2017. Despite, Amazon’s Australian expansion, company planned full year capital expenditure of $100m to support new stores, refurbishment programs, and reaffirmed its 16 -18% growth in EBIT for FY17. 

Sales performance as on 29 April 2017 (Source: Company reports)
 
Recommendation: The stock has declined by 11% after announcing the subdued Q3FY17 sales and growing concerns from Amazon’s entry into Australia. Given the existing competitive scenario, we give a “Hold” recommendation on the stock at the current price of $ 8.56

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