Myer share price: where next following Covid-19 Business Update?
As Australia’s economy grinds to a halt, retailers have been particularly hard hit, with the Myer (MYR) share price falling a staggering 70% in the last month alone.
Myer’s Covid-19 update summarised
At 8:13PM – after the market close on Friday – Myer (MYR) announced that it would be standing down 10,000 team members as a result of the coronavirus (Covid-19) pandemic.
These measures are set to come into effect over the next two days and last for an initial period of four weeks. Though Myer’s physical stores will be shuttering, its online businesses will remain open.
As part of Friday’s market release, the company plainly said that as ‘team members will not be working, they will not be paid during this period of imposed closure.' It was noted at least that ‘Full time and part time members will have greater flexibility to access their annual leave and long service entitlements, in addition to government assistance measures.'
A select group of business critical employees will continue to carry out their duties however, though they will do so at slightly reduced salaries and contact hours.
Management commentary at a glance
Myer’s Chief Executive – John King – took this announcement as a chance to reiterate the good progress that has been made on shoring up the company’s balance sheet and reducing its debt position, in recent times.
‘We are now taking all necessary measures to minimise our cost base, including engaging in ongoing discussions with suppliers and landlords,’ Mr King said.
Myer’s CEO further commented that the ‘decision to temporarily close all Myer stores and stand down so many loyal and dedicated team members is one of the toughest decisions this Company has faced in its 120 years of operation.'
Myer’s Board and its Executive Team – including Mr King – will not receive any renumeration during this closure period.
Myer share price: a volatile month
In the wake of the Covid-19 pandemic, retail stocks have faced particularly heavy selling pressure, as investors seemingly look to dump anything at all leveraged against consumer spending. To illustrate this point, in the last month JB HI FI has seen its share price fall 32.6%, Super Retail Group has dropped 48.3%, Nick Scali has collapsed 57.3% and Kathmandu has seen its stock pushed 66.2% lower.
Unfortunately, Myer has proven to be the worst performing of that bunch: from trading at 35 cents per share on 2 March to just 10 cents per share last Friday, the iconic retailer has seen its stock plummet a monumental 70% in just four weeks.
This precipitous decline is one that has likely displeased some of the markets biggest players. On just 5 March we wrote:
‘Heading into its H1, the renowned investment bank J.P. Morgan was Overweight the retailer, pegging Myer’s fair value at 75 cents per share.’
At the time J.P. Morgan’s price target was well under-water and continues to be so now. To be fair at least, even though the investment bank did lower its price target on Myer to ‘just’ 50 cents between our last piece of coverage on the retailer – J.P.’s revised fair value estimate remains well off the current mark.
Watch this space.
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