RETAIL INVASION ALL GETTING A BIT MUCH FOR MYER
Maxx and US online giant Amazon, according to a new investment report.
Shares in Myer plunged by close to 10 per cent yesterday after Credit Suisse said it expects shares in the retailer to slump to a historic low over the next year.
“The entry of TK Maxx and Amazon, Myer’s overly large store portfolio and ... a deteriorating discretionary spending environment ... is likely to be all too much for Myer,” Credit Suisse analyst Grant Saligari told clients.
The sell-off at Myer adds to the paper loss at the Solomon Lew-backed Premier Investments which grabbed a 10.7 per cent stake in Myer in March.
Premier shelled out $101.7 million to become Myer’s biggest shareholder with a stake worth $13.3 million less at yesterday’s close.
Mr Saligari said Myer chief Richard Umbers was doing what he could to resuscitate the business including closing underperforming stores, improving its brand mix and growing online sales.
“Directionally, we have no dispute with Myer’s strategy,” Mr Saligari said.
“The risk is that the starting point might be just too difficult, with the recent acceleration in competition.”
Mr Saligari reduced his 12month share price target for Myer from $1.44 to 82¢.
He noted his pessimistic outlook could be up-ended should Myer be presented with a takeover offer.
“The main risk to our call on Myer is the probability that there is a potential acquirer,” he said.
Amazon last month confirmed it will roll out a full local offering while US TJ Maxx is converting 35 Trade Secret stores to its brand.
Shares in Myer closed 9.5 per cent lower at $1.