The share price of Australian department store Myer (ASX:MYR) has slipped by 6 per cent this week ahead of its strategy day on May 28 tomorrow.
By close of trade on Monday, Myer’s share price was 73 cents, down from a recent peak of 78 cents over the weekend, which bumped up following Myer’s trading update on Friday last week.
The update showed department store sales up slightly by 1.9 per cent, while owned brand sales were down 3.9 per cent in the first 16 weeks of the second half. Owned brands include Sass & Bide, Marcs, David Lawrence and the five Apparel Brands, Just Jeans, Jacqui E, Jay Jays, Dotti and Portmans.
Myer Group executive chair Olivia Wirth reported “volatile trading conditions” impacting sales across the department store and the Apparel Brands. This includes heightened promotional activity across the retail sector as well as the internal resetting of Myer Group’s leadership team and the transition of its national distribution centre.
Myer also reported margin pressure from increased cost of doing business – in particular, store wages and occupancy outgoing costs impacted by inflation – and unfavourable foreign exchange movements.
The current share price of 73 cents (as of writing) is still a decent position historically, up from a low of 57 cents in early April, but down from a peak of $1.26 on December 27 last year.
Following Myer’s update, analysts at investment bank Canaccord Genuity dropped their target price for the group to $1.05, down from $1.10 five days prior. Despite the slip, analysts have kept their buy rating for Myer, noting pleasing and concerning elements to the trading update.
“To us it was a known that 2H25E trading would be tough for both Myer and Apparel Brands (forecasting earnings contractions for both), largely led by flat to negative top-lines and cost pressures,” Canaccord analysts wrote.
“This has been the case for 16 weeks period to date, albeit Myer total sales are running comfortably ahead of our thinking whilst cost pressures seem worse than we were hoping for.
“Apparel Brands sales have improved since last reported figures but remain in negative territory. Of importance, Myer brand health looks to be in good stead and we are looking for the investor day to flesh out narratives as to how management intend on driving customer loyalty and increased sales per store/improved omni-channel execution.”
Following Myer’s update last week, Canaccord analysts lowered their divisional second half estimates to allow for higher promotional intensity and cost inflation, but they highlighted this subjective and difficult to forecast accurately given lack of disclosure.
“We expect MYR will step through its recently implemented leadership structure and capabilities, whilst emphasising the benefits from the Apparel Brands and reset Myer private label strategy,” analysts wrote. “We also see clear communication around capital management and ROIC targets.”
Five days prior to Myer’s trading update, Canaccord also shared a note on what investors can expect in the department store’s investor briefing tomorrow.
First, they expect Myer will step through its recently implemented leadership structure and capabilities.
Myer has signed a few new names and promoted others in a c-suite revamp. This included promoting Belinda Slifkas to chief merchandising officer in March 2025, while poaching Darren Wedding from Super Retail Group to be the group’s chief supply chain officer.
Meanwhile, Kathy Karabatsas was appointed group chief financial officer in March, who recently held the same role at David Jones.
The latest hire was Megan Collins in April this year, appointed as chief people officer, who held similar roles at Sportsbet, Newcrest Mining and Treasury Wine Estates.
Another key hire was Mark Medwell to take on the role of chief information officer. Medwell held a similar role at Cotton On Group.
From that, Canaccord analysts expect the biggest talking point at the investor briefing will be around loyalty.
“We see management layering in detail as to how they intend to improve the curation of product (which may lead to less discounting and promotions), activate their customers (driving increased frequency and spend) and enhance their omni-channel execution (hence potentially lifting sales per sqm and online sales),” the analysts wrote.
“Much of this may take time to execute on, in our view, but nonetheless, we consider MYR to have broader optionality to grow sales and earnings moving forward than what the current valuation is suggesting.”
Canaccord analysts deem that Myer’s brand health factors are pointing in the right direction, with active members up 6 per cent in the first half of FY25, MYER one loyalty tag rate at record levels, and new member sign-ups up 21 per cent in the first half.
“A stronger consumer/macro backdrop is not a core driver of our medium-term forecasting, but feasibly is an important upside/downside risk driver to consider,” the analysts wrote.