Myer slumps on earnings

The retail giant posted its FY earnings today, which subsequently resulted in a pretty sharp drop.

Source: Bloomberg

The headline FY net income came in at $98.5 million – below estimates of $101.4 million. However, there were some positives, with sales relatively in line with estimates while the $0.055 dividend was slightly ahead.

Like other retailers, MYR’s gross profit margin picture continues to deteriorate along with declining sales growth. As a result, MYR was reluctant to provide guidance, but anticipates modest growth in sales and margins.

Regardless, the market was happy to sell MYR off today – we saw a sharp drop at the open, resulting in a big gap. MYR extended its losses into double digit territory, with investors reluctant to catch it at lower levels.

The stock has been in a downtrend since March, taking it all the way down to $1.97 in June. After experiencing a stellar recovery heading into its results, it seems the stock is back to square one. MYR is testing the 61.8% retracement of the June-to-September rise at $2.18.

A close below this level would leave MYR vulnerable to a move towards the $2 mark in the near term. Should $2.18 hold and we see a couple of positive days, then investors could perhaps look to take advantage of the price weakness.

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