Why Myer Holdings Ltd shares could keep moving higher

Myer Holdings Ltd (ASX:MYR) shares have rocketed higher after showing signs that its turnaround is working. Is it too cheap to ignore?

| 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

There haven't been many in the last few years, but today is a great day for shareholders of department store operator Myer Holdings Ltd (ASX: MYR).

Following the release of its annual general meeting presentation this morning the retailer's shares have rocketed higher by over 8% to $1.13.

The reason for the excitement is likely to be its first quarter trading update which revealed that same store sales rose 1.6% during the quarter.

Impressively the Australian Financial Review reports that this is the first time it has grown comparable sales at a quicker pace than arch rival David Jones in over two years.

It also means five straight quarters of same-store sales growth, which possibly indicates that Myer's turnaround strategy is in fact working.

Comparable store sales in Flagship and Premium stores increased at a stronger rate of 2.8%. This helped lift total quarterly sales by 0.6% to $719.2 million despite store closures and refurbishments.

For the full year management expects EBITDA growth to exceed its sales growth. Rather positively it also anticipates a return to profit growth.

Whilst I am reasonably bearish on the company, I will happily admit that Myer's transformation so far appears to be working well. The strategy may well result in solid returns for shareholders over the next couple of years, especially considering how cheap its shares are relative to the rest of the market.

But I would suggest investors tread carefully. Whilst I have been impressed with the progress Myer has made with its omni-channel sales, the potential arrival of Amazon on Australian shores is something of a concern.

Retailers such as Myer, JB Hi-Fi Limited (ASX: JBH), and Woolworths Limited (ASX: WOW) could come under significant competitive pressure should the much-speculated Amazon launch occur. For this reason I would avoid these shares.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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 »