Myer Holdings Ltd

MYR Details
 
Restructuring of TOPSHOP’s Australian operations in line with evolving competition: Myer Holdings Limited (ASX: MYR) recently announced that Austradia Pty Limited (in which Myer holds a 20% interest), the Australian franchisee of TOPSHOP TOPMAN has appointed administrators Ferrier Hodgson as the fashion retailer’s sales have been continuously falling while losses were up. Ferrier Hodgson will work with Myer and the UK-based franchisor Arcadia Group on restructuring activities to deliver the finest outcomes for customers and other stakeholders. MYR had acquired a stake in Austradia in September 2015 under its “wanted brands” strategy. The group had stated that the trading of 17 TOPSHOP and 17 TOPMAN concessions in Myer stores would continue as normal, despite the latest development. A key aspect to note is that the current restructuring seems to be evolving from the entry of Amazon and TK Maxx into the Australian market and the mounting losses owing to intense competition. Recently, global e-commerce giant Amazon announced that it will open online shop front service in Australia, and this is increasing the pressure on the domestic retail sector to catch up with the digital economy. Concerns grew even more in recent months when Amazon registered hundreds of trademarks in the country and announced for additional investments.

The stock has fallen 36.5% over the past six months as on June 27, 2017, in line with peers in the anticipation of increased competition with Amazon’s entry in Australia. The overall industry sentiment also further deteriorated with recently reported weak consumer spending data in Australia. However, MYR now seems to be little judicious in terms of its discounting approach while the group continues to enhance efficiency levels. Given the ongoing restructuring initiatives and improving efficiency levels to stand out in the evolving competition, we maintain a “Buy” recommendation on the stock at the current price of $0.84
 

MYR Daily chart; (Source: Thomson Reuters)

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