Where his mouth is
Myer CEO spends $43k on 100,000 shares
MYER’S new chief executive John King has upped his holding of shares in the troubled department store chain a day after it posted a near $500 million loss.
Mr King, who has pledged to return Myer’s focus to its traditional mid-market customer base and wean it off endless discounting, yesterday spent $43,500 buying an extra 100,000 shares.
Myer’s share price surged by more than one-third yesterday, handing Mr King a $13,500 paper profit on his latest trade.
The jump came as analysts expressed cautious optimism about Mr King’s plans but warned breaking free from discounting would not be easy.
“We are cautious on any retailer trying to unwind promotional activity given how accustomed consumers are to buying on promotion,” Citi analyst Bryan Raymond said.
Mr Raymond said Myer’s new $400-million loan facility bought it some breathing room but came at a cost via higher interest rates and would not leave it with any spare investment firepower.
Deutsche Bank analyst Michael Simotas also expressed concern that Myer’s plan will not be any more successful than the numerous ones of the past five years, noting the focus on exclusive brands and cutting costs had been tried before.
“We are not convinced management can overcome Myer’s perennial challenge of not being able to grow sales without conceding margin or expand margin without losing sales,” Mr Simotas said yesterday.
Myer is also one of the most heavily shorted stocks on the share market.
Short sellers – who make money when a company’s share price falls – changing their tune on Myer’s outlook and buying stock to close out their trades may have also boosted the retailer yesterday. Shares in Myer gained 37.3 per cent yesterday to 57c.