Private equity players believed to be trying to make Myer their store

Department stores like Myer have been facing major disruption from online retailers in recent years. Picture: NCA NewsWire/Bianca De Marchi

Talk has once again resurfaced that private equity is circling the Australian listed department store chain Myer.

Some, though, believe that any move to buy the company would not be for the faint-hearted — and that parties interested would most likely be groups such as Oaktree, Apollo, Varde and Bain Credit.

They also say that many would be hovering and would only put an offer on the table if it collapsed into administration or receivership.

Allegro Funds Management, which purchased the Australian general merchandise division from Steinhoff International that included Best & Less and Harris Scarfe, could also be taking a look.

But some say that a party with a lot more capital would likely need to take it on.

Myer counts Solomon Lew as its major investor, and some believe that he could also strike should Myer collapse.

On the face of it, Myer on Thursday produced a reasonably positive result, yet still, its shares dived 10 per cent, taking its market value to $255m. The retailer is said to be sitting on about $200m of cash which could make a deal look attractive, but according to its accounts it has $1.6bn of lease liabilities, which are a major deterrent.

There are also some who say that given the buoyant retail conditions, its performance should have been a lot stronger.

Department stores like Myer have been facing major disruption from online retailers in recent years. The company on Thursday posted a 76.3 per cent lift in its net profit for the six months to January to $43m.

 

Last year, Myer was working with KPMG to address challenges that came with the global pandemic, and it sought rent relief from its landlords. KPMG offered assistance with its supply chain, working capital and refinancing solutions.

Myer has about 60 stores, with lease agreements that range from five to 60 years. It is understood the department store has wanted to shorten some of its leases, and to exit certain malls altogether.