MENU

WAM Capital Limited (ASX:WAM) has invested in Myer Holdings Ltd (ASX:MYR)

Whilst I was finishing up working at the end of Friday last week, I was completely surprised to read that Myer Holdings Ltd (ASX: MYR) has a new substantial shareholder.

Listed investment company (LIC) WAM Capital Limited (ASX: WAM), along with other associated WAM entities, announced to the market that the 5% substantial holding threshold had been passed.

Whilst the WAM group crossed the threshold on 14 September 2018, the investment team had been accumulating shares going back to 4 July 2018, with a large purchase of shares on 6 August 2018.

My colleagues and I had only just been discussing which was a harder business to turn around – Myer or AMP Limited (ASX: AMP), earlier in the day.

In an email to investors WAM’s chief investment officer Chris Stott said “CEO John King has a strong track record after previously turning around British department store House of Fraser. We believe his ‘back to basics’ approach, focus on the customer and reduction in corporate costs is the right strategy for the business.”

Mr Stott also pointed out that Myer has recently reached an agreement with creditors to refinance a $400 million bank facility, granting Myer two and a half years to improve its position.

Whilst Myer does have a plan to turn things around it could be a very difficult road ahead. Myer has disappointed many recent shoppers with reports of a confusing store layout, poor customer service and even that the stores are too dark.

Another issue for customers seems to be that many staff in the store are actually employed by the brands sold inside Myer – therefore they are unhelpful and unable to help when asked about other brands and other Myer queries.

Foolish takeaway

The Myer share price recovered around 50% from last week’s mid-week low of $0.40. Even now, it’s trading at 15x FY18’s underlying profit before significant items.

This doesn’t strike me as a long-term investment. If Myer can turn things around then sentiment and profit could get a quick boost. However, department stores in the USA show how difficult it is to succeed in this era of internet shopping in the longer-term. I’d rather go for a retail share like Specialty Fashion Group Ltd (ASX: SFH) over Myer at today’s prices.

Indeed, this top ASX share could be one of the best ones to own for retail growth, it’s one of the businesses disrupting Myer.

Motley Fool Australia Issues Rare "Double Down" Buy Alert

Scott Phillips has stumbled upon a little-owned stock he believes could be one of the greatest discoveries of his 25 years as a professional investor.

 

This is your chance to get in early on of what could prove to be a very special investment recommendation. Think about how many investing trends you've missed out on, even though you knew they were going to be big. Don't let that happen again. This is your chance to get in early.

Simply click here to get started and access our secure sign-up page.

Motley Fool contributor Tristan Harrison has no position in any of the 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 Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!