Premier Investments Limited (ASX: PMV) shares are tanking today through no fault of their own, with their massive stake in the underperforming Myer Holdings Limited (ASX: MYR) dragging the stock lower.
Myer on Tuesday released its full-year results, posting a lacklustre 30% fall in underlying earnings to $36.8 million and a whopping $211.2 million statutory loss on the write-down of goodwill on its Myer Apparel Brands business.
And that's where Premier comes in. Premier sold five fashion brands to Myer in April, in a deal which handed Premier 890 million new shares in Myer.
All told, Premier now owns slightly more than 2.6 billion shares in Myer, or a 31.1% stake.
And with Myer shares plunging 25% on Tuesday to 48 cents, before hitting a 12-month low of 47.2 cents earlier, the collateral damage is flowing through to the Premier Investments share price.
Premier shares were the biggest loser among ASX 200 shares on Tuesday morning, with the $3.4 billion company trading 4.6% lower at $20.16.
It will also not help that Myer cut its final dividend to zero, and gave no indication when dividend payments might resume.
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Turnaround time for Myer
Myer Chief Executive Officer Olivia Wirth labelled FY25 a "transition year" for the company, and one which was characterised by soft macroeconomic conditions.
She was also talking up the company's growth plans, which include getting more out of the company's Myer One loyalty program – an area where Ms Wirth has vast experience, having run the same program at airline Qantas Airways Limited (ASX: QAN).
We have started to see the benefits flowing through from the integration of Apparel Brands and are continuing to target identified synergies. The addition of Apparel Brands represents a significant diversification of our sales with 26% of sales now coming from brands owned by Myer Group. In executing our Myer Group Growth Strategy, we are moving at pace and gaining early traction, including the launch of MYER one at Apparel Brands in August, the overall MYER one relaunch on track for October, Just Jeans' new format store rollout, as well as introducing new brand partners and welcoming back brands returning to Myer Retail.
Premier is yet to release its own full-year results.
At Tuesday's price, Premier shares are trading near the lower end of their range over the past 12 months, between $18.08 and $36.87.
