Myer shareholders wait in vain for returns as stagnant outlook offers nothing to recommend

Myer shareholders wait in vain for returns as stagnant outlook offers nothing to recommend. Net profit for the year ended July fell 23% to $99 million, below market expectations for a $106m result. As recently as FY11, Myer made a $163m profit. Margins this year were weak and the retailer missed its cost guidance. Myer faces increasing competition from international retailers and online retail. Management is valiantly executing a credible strategy, but external, structural pressures threaten to cancel out the benefits. Essentially, Myer's outlook is stagnant, at best, the company having to spend more just to stand still. The 31% cut to the final dividend signals directors' reservations about the future. We expect to downgrade the profit-ability assumptions behind our $2.19 a share valuation. This will leave the stock trading in line with value. Given Myer's problems, we could not recommend the stock at current prices. (VIEW LINK)