The Myer Holdings Ltd (ASX: MYR) share price has had a torrid time in the last few months. It's down 13% in a month and has sunk over 40% in the last six months, as we can see on the chart below.
Myer is a department store business that has had a really bad time over the past decade. Investors have seen shopping habits change for the company over time compared to when it first listed. However, John King's appointment in June 2018 saw the business come up with a turnaround strategy and the last couple of financial years have shown positivity.
Of course, it was announced earlier this year that King is leaving the business and there's a lot of uncertainty about the upcoming retail conditions amid high interest rates.
Why the Myer share price could be a cheap buy
The latest retail data was announced by the Australian Bureau of Statistics (ABS) for the month of September 2023. The numbers showed a seasonally adjusted 0.9% month-over-month increase and a 2% year-over-year increase compared to September 2022.
Interestingly, of all of the different retail categories, department stores saw the biggest increase with a rise of 1.7%.
Of course, Myer isn't the only department store, so it's possible that Myer's competitors were the ones to benefit.
However, it is possible that Myer's (older) customer base isn't suffering much from the interest rate environment because they collectively don't have big loan balances and on average have sizeable cash balances that could be now earning more interest income.
The latest updates from Myer were decent, though not thrilling. Sales in the second half of FY23 still managed growth of 0.4%, while in the first six weeks of FY24, department store comparable sales were only down 1.9%.
Online sales may also be able to cushion some of the store weakness. In the second half of FY23, online sales rose by 3.2% year over year.
According to Commsec, the business is projected to generate 6.2 cents of earnings per share (EPS) in FY24, down from 7.2 cents in FY23. That means the Myer share price is trading at just 8 times FY24's estimated earnings.
It's also projected to pay an annual dividend per share of 3.5 cents in FY24, which would be a grossed-up dividend yield of 10%.
Of course, projections are just guesses. It's possible that the profit and dividend could be worse than expected, or possibly better.
Director Terry McCartney certainly thinks the business is an opportunity after investing $99,000 on the market to buy Myer shares.
Myer share price snapshot
Over the past 12 months, the Myer share price has fallen around 20%.
