Department store Myer (ASX:MYR) is set to gain a few tailwinds following the collapse of its rival, David Jones, but will likely face a tougher journey to Christmas 2026.
This is according to Canaccord Genuity, with its latest note to investors detailing Myer’s potential future under a shrunken David Jones.
The first point of call is immediate-term sales. Canaccord highlighted that market-wide promotional activity has been evident in recent weeks, including activations from David Jones and Myer. Some brands, including Saint Laurent and Valentino, have also pulled concession stock from some locations, while some limited clearance and early Black Friday activity ramps up.
Canaccord cautioned that this creates additional headwinds to Myer’s current trading.
Putting immediate-term sales aside, Myer is set for a few tailwinds in the longer term. Canaccord’s base case assumes selected David Jones assets, including its cards and loyalty program, and its CBD and premium metro stores, continue under new ownership. On that basis, it rated four of the remaining five factors as net positives for Myer.
On brands, the broker pointed to Myer’s comments in September that it was attracting new labels, both on exclusive terms and as concessions. Canaccord expects that trend to be particularly active now, and believes a well-executed approach could set Myer up for broader brand ranging into FY28.
It also found that 24 of Myer’s 58 stores, or around 40 per cent of the network, share a centre with a David Jones store, and expects Myer to face less competition in many catchments regardless of the outcome.
Both department stores renewed their loyalty programs within the past 12 months. Canaccord believes Myer has made strong progress with its program, which should be further strengthened by a wider brand offer and a weakened competitor.
In July, the broker pointed to Myer Retail’s loyalty tag rate of 81.5 per cent and 5.3 million active members. This tag rate excludes Apparel Brands – Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans.
Canaccord also expects a smaller David Jones to run more targeted promotions, which could ease gross margin pressure on Myer over time.
The broker rated its final factor as neutral: whether a going-concern David Jones can secure capital backing for rental guarantees, supplier terms and operations, with any new operator needing to reassure stakeholders on its long-term viability. It noted Myer’s net cash position by comparison. Myer reported net cash of $100 million at the end of FY26.
“We view current retail market conditions as being particularly challenging, stemming from a weak consumer backdrop, higher rates and likelihood for heightened promotional activity through peak seasonal trade,” Canaccord’s note to investors read. “News this week around David Jones adds to the near-term uncertainty.
“Looking through this period, however, this situation provides MYR with the opportunity to capture brand share and potentially derive benefit from less competition. Better negotiating leverage with suppliers and landlords are also plausible outcomes.”
David Jones’ directors appointed McGrathNicol as voluntary administrators last week, while secured lender Hilco Capital appointed FTI Consulting as receivers and managers of parent company ACP Riley Street Midco. McGrathNicol is seeking offers for a recapitalisation of the business or a sale as a going concern.
Before the appointment, David Jones reportedly sought landlord approval to close at least half its stores, with up to 26 of its 38 locations tipped to close and a network of between 12 and 20 stores reportedly under consideration. David Jones and Anchorage declined to comment on the store closure reports.
The supplier shift was already underway. Labels including Acler, Effie Kats, Significant Other and Aston Studio have moved to exclusive arrangements with Myer, while Accent Group stopped supplying David Jones in July and Country Road Group plans to cut nearly 100 of its concessions across the department store from early 2027.
Myer Group reported FY26 total sales of $4.09 billion, with concession sales up 8.2 per cent. It posted a statutory net loss of $276.5 million for the year, with the vast majority of this being from impairment charges.