MARKETS SPECTATOR: Myer beware

Sales up. Stock down. Australia’s largest department store company today said its revenue in the 13 weeks to April 27 rose 0.5 per cent to $652.5 million. Many analysts expected Myer’s sales to be “soft” for the period, but some say the number took them by surprise and indicates a slowdown in the economy and consumer spending. Rate cuts by the Reserve Bank have done little to kick start consumer spending.

“This is a weak result given the stimulus given to households through a reduction in interest rates,” Citigroup analyst Craig Woolford says. Myer chief executive Bernie Brookes, in an ASX statement today, said he was “cautious” on the outlook for retail spending.

At 11:56am AEST, Myer’s stock was down 5 cents, or 1.99 per cent, to $2.72. The shares have fallen 17 per cent since its 52-week high of $3.26 on April 29. The benchmark S&P/ASX 200 Index has risen 1.1 per cent since April 29 and the index was down 10.3 points, or 0.21 per cent, to 5169.1 at 11:56am AEST.

Woolford expects Myer’s stock to drop to $2.60. He expects $3.16 billion in sales for Myer in its 2013 financial year – 0.2 per cent below Bloomberg consensus forecasts. Still, a dividend yield of 6.9 per cent may limit the stock’s downside.