Can David Jones and Myer Holdings survive?

Yet another international competitor ramps up their Australian fashion offering

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's going to take some fancy footwork from department store retailers David Jones Limited (ASX: DJS) and Myer Holdings Limited (ASX: MYR) to remain relevant to Australian consumers.

Neiman Marcus, an American luxury department store retailer is planning to invest more in Australia to push its website to consumers, according to a report in the Sydney Morning Herald (SMH).

Increased marketing and marquee fashion events are planned, as Nieman Marcus's Australian website climbs in importance, despite being just over one year old. Australia is now one of its biggest sales regions, with women's apparel, shoes and handbags the biggest selling categories.

Nieman Marcus is clearly targeting upmarket David Jones and to a lesser extent Myer Holdings. Last year the retailer posted a 15.1% increase in online sales, and derives a large portion of sales from its online site.

The SMH estimates that many established US bricks and mortar department stores such as Macy's, Bloomingdale's and Nieman Marcus generate around a quarter (25%) of total sales and higher from their online stores.

That's a far cry from Myer's target of 5% and David Jones 2% of total sales coming from online.

And it seems Myer for one has its priorities the wrong way round. Looking to forge a friendly merger with David Jones and expand its retail store network, rather than focus on driving customers to its online store may end up costing Myer big time.

With a wave of overseas retailers setting up shop or expanding their Australian offerings, the two Australian department store retailers are facing an unprecedented attack on their revenues and earnings.

It also appears that they have underestimated the impact retailers such as Zara, Nieman Marcus, Williams-Sonoma, J. Crew, Aeropostale, Abercrombie & Fitch, H&M, Topshop and Old Navy could have on their future.

Foolish takeaway

Foolish investors may want to give these two retailers a pass until their future becomes clearer. Kathmandu Holdings (ASX: KMD) and OrotonGroup (ASX: ORL) may be better alternatives.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »