Myer’s share price has taken a tumble since our most recent upgrade in Myer: Moribund no more?. It’s fallen 17% over the past month although it remains above our original upgrade in Is Myer still a pariah?.
Picking the reason for short-term price movements is tricky. That’s particularly so with speculative stocks, which tend to be more volatile.
Australia’s warm autumn isn’t helping apparel retailers, however. It probably has something to do with being male, but I’ve never quite understood why winter clothing begins appearing in stores in February. Nevertheless, the current warm weather suggests that winter woollies haven’t exactly been walking out Myer’s doors.
Also making headlines this week was news that UK department store retailers Debenhams and House of Fraser had launched dedicated Australian online stores. Last year Debenhams announced it would open four or five Australian franchised stores in partnership with Harris Scarfe as well. This is a non-story – Myer has been dealing with an influx of international and online competition for the past five years and sales have been reasonably resilient.
Retailing generally is a super-competitive and seasonal business. With that in mind, expect sentiment to ebb and flow with the seasons and whichever retailing concept is (literally) in fashion. Myer still looks excellent value and our recommendation remains SPECULATIVE BUY.