Myer Holdings Limited

Enhancing the Portfolio: Myer Holdings Limited (ASX: MYR) is a departmental store chain business. The company is founded by Sidney Myer in 1900 (118 years ago) in Australia and listed in 2009. The company’s broad range of products is Beauty, Electrical Good, Toys, Womenswear, Menswear. David Jones is a primary rival of Myer’s. MYR’s stock climbed up 2.564% on December 14, 2018 following the announcement of the company in relation to Bob Thorn who will be stepping down from the Myer Board in February 2019. 

FY18 financial performance – A Quick Look: The financial result suggests it has been a challenging year for the company. Total sales were $3.1 billion, which is down by 3.2% and on a comparable stores basis it was down by 2.7 % on a Y-o-Y basis. Total online sales reached $239.4 million which includes $30.8 million via in-store iPads, sass & bide and MDL online sales and The Myer Market. Operating gross profit reached $1.2 billion, which is down by 2.9% and operating gross profit margin increased to 38.2%. Cost of doing business reached $1 billion, which is enhanced by 1.5%. Based on performance, the Board of Directors has decided not to pay any dividend in this financial year.

Update on Q1 FY19 Results: On 16 May 2018, the company has advised that with effect from the beginning of FY19, they will not report quarterly sales. Besides, the management stated that they are focusing on the profitability of the company and are not going to chase unprofitable sales to increase the top line of the business. Due to this, total sales value in Q1 FY19 was below Q1 FY18; however, the NPAT loss for the quarter showed an improvement on Q1FY18. The online sales for the first quarter grew only by 3.6% which was below the online growth rates for recent quarters. This slowdown can be credited to the crossing over to their new and enhanced websites as well of not chasing unprofitable sales. Even after that, total online sales increased 28% (YOY basis) in November.

On the operational front, the company has completed works of Blacktown and Castle Hill in New South Wales, Maroochydore in Queensland, and Eastland in the Victoria. In Melbourne and Sydney, the company has introduced new hair and beauty services, and the company is continuously improving the productivity of the store portfolio.  Hence, we assume that the company has decent outlook in years to come as it focuses on cost reduction, simplified business processes transforming customer experience in store, and brand building, etc.


Customer First Plan (Source: Company Reports)

In the last six months, the share price of the company has shown a volatile movement, and it was down about 3.70% as on 13 December 2018 but from one-month stock price has turned south and given a negative movement of 16.13% over the past one month. Hence considering fundamentals of the company and reviewing management future goals and current stock performance we maintain our “Hold” recommendation on the stock at current market price $0.400.
 

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