The Myer Holdings Limited (ASX: MYR) share price is on watch after the Federal Court found it misled shareholders in 2015.
What did Myer announce yesterday?
Myer provided an after-market update as the Federal Court handed down a judgement regarding its 2015 conduct.
A class action was brought against the company and its then-CEO Bernie Brookes regarding its profit guidance.
The Court found that Mr Brookes' 11 September 2015 comment that Myer "anticipated profit growth" in FY15 was unfounded.
The Myer share price slipped lower as it subsequently downgraded net profit after tax (NPAT) guidance on 19 March 2015.
The Court found that Myer engaged in "misleading or deceptive conduct" from 21 November 2014 to 19 March 2015.
The Court also found that there was "no evidence" that the misleading profit guidance caused any loss or damage.
What does this mean for the Myer share price?
Myer entered a trading halt early yesterday afternoon ahead of the judgement and subsequent announcement.
The Myer share price was trading at $0.57 per share prior to the halt as it continues to slide lower.
While Myer shares are cheap at the moment they are still trading at 19.6x earnings, given earnings are also declining.
The Federal Court found that no damage was caused because no one acted on the misleading guidance numbers.
Foolish takeaway
The market reaction to the Federal Court judgement will be one to watch in early trade.
The Myer share price has been one of the hardest-hit in the ASX Retail sector in recent years. Retail trading conditions continue to deteriorate and those bricks-and-mortar operators like Myer are struggling.
It's been a similar story for rival David Jones as Aussie retail battles the move towards an online-only model.
I would prefer to look at the Consumer Staples sector rather than Consumer Discretionary at the moment. That could mean that Coles Group Limited (ASX: COL) or Woolworths Ltd (ASX: WOW) are in the buy zone in 2020.
