Myer Holdings Ltd reports full-year results: Is it a bargain?

2014 results indicate better times are ahead for Myer Holdings Ltd (ASX:MYR).

| 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

Headline results from FY2014 suggest Myer Holdings Ltd (ASX: MYR) continues to decline (this is the fourth year of falling profits). Revenues were sluggish, net profit fell 22.6%, gearing rose slightly to 28.7%, retail conditions were erratic and the lower A$ added to costs.

Well, the market didn't like it, with the share price falling 8% soon after opening. A bit odd as there were positive pointers in the accompanying presentation:

• Myer has continued to invest heavily in its own business – $87m in 2014 – two new stores, store refurbishments, further upgrades of distribution channels and development of fully owned brands. Over the year two other stores (Dandenong and Elizabeth) were closed permanently and further rationalisation of stores can be expected.

• Good growth over 2014 in high margin cosmetics (despite price deflation), fashion accessories, youth and general appliances.

• Achieved high cash generation, largely attributed to recent investments in point-of-sale and inventory systems.

• Online sales growth was up 100% over the year and was accompanied by an increase in transaction values.

• Inventory turn improved to 3.6 from 3.4 and aged stock percentages declined; indicating management is on top of the game.

Management suggested the benefits of the ongoing refurbishment program will become apparent over the course of 2015. In addition marketing strategies will be revitalised with a special focus on prime selling periods (Christmas etc.). This strategy will be supported with new online initiatives and new partnerships with selected brands.

With its own brands now comprising 20% of sales Myer has considerable flexibility in the market. In addition 15.6% of sales are through concessions. Although the growing swells of international retailers pose a threat they also (if located nearby) help increase foot traffic, some of which will mean increased sales to Myer.

Some experts continue to maintain physical stores will stay under severe pressure from pure online retailers. However – 'the more things change, the more they remain the same'. This according to a recent US survey which suggests bricks-and-mortar stores are once again the preferred way to shop amongst teenagers and young adults.

In my view Myer ($2.25) offers value and is a sound buy for longer-term investors.

Motley Fool contributor Peter Andersen has shares in Myer Holdings Ltd

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 »