Myer shares hit a new low as investors doubt strategy

INVESTORS have given Myer’s new strategy a thumbs-down, throwing a cloud over its $600 million revival plan. Can “an international coup” bring it back?

Richard Umbers

MYER shares have plunged to a new all-time low after the completion of the first part of the department store’s $221 million capital raising.

The shares were down 19 per cent to 94 cents at 11.45am AEST, after dropping to an all-time low of 90 cents overnight, with their value diluted by the offer of two new shares for every five owned by investors.

Credit Suisse retail analyst Grant Saligari told The Australian the share price fall reflected “a very low confidence in the strategy that has been articulated”.

“To trade below the rights price is pretty significant,” he said.

“It’s a very poor show of confidence.”

The retailer this week reported a 70 per cent drop in full year profit to $29.8 million, and launched a $600 million overhaul of stores in an effort to boost sales, but analysts were sceptical about its prospects of success.

Embargoed May 1, 2014 Kate Moss Topshop Style page WAP Picture: Supplied

Chief executive Richard Umbers announced plans for “a fresh interpretation of our brand, a re-energised and relevant range, improved service and in-store experiences” on Tuesday while unveiling the company’s dismal full-year results, taking the unusual step of emailing customers about the strategy.

Bottom-line profits plummeted by 70 per cent in 2014-15, and hopes are now hanging on a partnership with British label Topshop, set to be rolled out at more than 20 stores, to help revive the department store’s fortunes — with the investment described by Mr Umbers as “an international coup” for the business.

To help fund the plans, Myer has so far raised $99 million from institutional investors, and expects to raise a further $122 million through a fully underwritten retail entitlement offer.

Myer shares were valued at $4.10 when they first went to market in October, 2009.