Myer shares tumbled after its full-year earnings disappointed, with speculation swirling that it could become a takeover target for Premier Investments

David Walker

Clime Asset Management

Myer shares tumbled after its full-year earnings disappointed, with speculation swirling that it could become a takeover target for Premier Investments. The department store faces increasing competition from international retailers and rejuvenated local brands, which poses a challenge to revenue and margins, as well as a need to continue with capital expenditure to maintain current returns on equity. The cost of doing business as a proportion of sales has risen every year for the last four years and this trend is set to continue. Myer is executing a credible strategy but external pressures threaten to cancel out any benefits. We recently downgraded our FY15 valuation to $1.88, which means Myer is overvalued. The group's outlook for earnings and dividends is stagnant as it spends more to stand still. Read the full analysis: (VIEW LINK)


David Walker
David Walker
Senior Equities Analyst
Clime Asset Management

David is responsible for equities commentary and editorial content on StocksInValue. He has over 14 years' experience in equities research, funds management, general investment advice and online publishing.

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