Stock of the day: Myer Holdings

(AI video summary)

This video was created on 23 May 2025 for IG audiences by ausbiz.

ASX code: MYR

Myer's mixed trading performance

Myer Holdings, the iconic Australian department store chain, has labelled 2025 as a transition year following challenging market conditions. At its Investor Strategy Day, the retailer reported that second-half (H2) sales rose 2%, with comparable sales up by 1.5%.

However, the company's financial performance has been significantly impacted by a downturn in its apparel brands, which represent a quarter of the core business. These brands experienced declines of 3% - 4% across key metrics, creating headwinds for overall performance.

The company cited currency headwinds, rising costs, and ramp-up challenges at its new Victoria distribution centre as significant obstacles affecting margins.

Market movements

Despite some positive trading metrics, market experts remain cautious about Myer Holdings' prospects. The stock has experienced significant volatility, moving from $0.70 to $1.20, before returning to about $0.70. Currently trading at 16 times earnings, analysts believe the valuation does not reflect growth challenges.

Solomon Lew's quarter ownership is highlighted as a potential catalyst, given his retail turnaround success. 

Investment outlook

Despite the new chief executive officer (CEO) having experience with Qantas loyalty programs and potential benefits from lower interest rates, analysts remain cautious about Myer's prospects.

Consumer spending pressures and slow effect of rate cuts pose challenges for the retail sector. Myer's online marketplace strategy and loyalty program offer potential, but operational headwinds suggest investors might find better mid-cap opportunities with stronger growth.

Analysts suggest selling Myer Holdings shares, not due to negativity about the business, but because better investment opportunities exist in the current market.