The Myer Holdings Ltd (ASX: MYR) share price has fallen almost 3% to 98.7 cents after the department store operator released its third-quarter update to the market.
Here are the key takeaways:
- Third-quarter sales down 3.3% on the prior corresponding period to $653 million.
- Sales down 2% during the quarter on a comparable store basis.
- Year-to-date sales down 1.3% to $2,438 million and down 0.3% on a comparable store basis.
- Sales per square metre on a rolling 12 months basis up 5.1%.
- Online sales increased 36% year-to-date.
- Full-year net profit after tax guidance reiterated.
What happened?
Management has blamed the weaker-than-expected result on challenging trading conditions and the negative impact of severe weather in Queensland and Northern New South Wales.
Elsewhere the performance of its sass & bide brand has continued to disappoint. After a poor first-half, things haven't improved for the luxury clothing brand. Management advised that $1.5 million of Myer's shortfall in third-quarter total sales has been attributed to sass & bide.
But it wasn't all bad. I have been impressed with the growth of its online business, which is hugely important in this day and age.
Pleasingly, this is likely to receive an additional boost moving forward following the implementation of the Afterpay Holdings Ltd (ASX: AFY) buy now, pay later service.
The Afterpay service has been a saving grace for many retailers during these difficult trading conditions, providing them with a meaningful uptick in online sales.
Should you invest?
With its shares changing hands at approximately 11x trailing earnings, Myer certainly does look cheap.
But while this might well prove to be a one-off bad weather-impacted quarter, I think it would be prudent to keep away from Myer for the time being.
Especially with the potential arrival of Amazon in Australia. Myer is a retailer which I fear may be impacted more than most by the online retail behemoth.
In the meantime investors might want to consider retail shares such as Premier Investments Limited (ASX: PMV) or Bapcor Ltd (ASX: BAP).
