Everything Is Not Good With Myer Holdings: What Investors Need To Watch

Myer Holdings Limited (ASX:MYR) has been dealing with lots of criticism lately which impacting not only the company’s share but also its image in the minds of the market players. Even today, a lot has happened with the company that could hamper the image. Billionaire Solomon Lew stated that he is not surprised on finding that the company (Myer) has lost the balance again and the securities of the company have been put to a trading halt on November 16, 2018. Geoff Wilson (fund manager) as well as Solomon Lew are having significant exposure to the company and hence the struggling period for the company is expected to impact both of them. The market participants are of the view that the business model of the company has been witnessing increased challenges.Â

Mr. Solomon Lew has been holding 10.8% stake in Myer Holdings whose value has declined substantially. He has been arguing against the company and has been making attempts to leave the board of Myer. It seems like he has no hopes from the company as when he attended Sohn Hearts and Minds investment conference and was asked for the opinions with respect to the reports regarding the decline in the sales he stated that this news did not come to him as a surprise. Mr Wilson also stated that he is completely aware about the fact that the departmental stores are having a tough time. However, he is still wondering that whether Myer’s fortunes can be turned around and that making any assumptions would not be desirable at the moment.

What Happened on November 16, 2018?

It seems like the negative outlook for Myer by the market players is not enough for the company and now Myer has turned the compliance unit of Australian Securities Exchange or ASX against itself. On November 16, 2018, ASX’s compliance unit got annoyed on the statement which the company released earlier during the day. The Australian Securities Exchange has deemed the response which it has stated to be inadequate. Therefore, the ASX forced the company to go in the temporary trading halt phase.

Before the mid-day on November 16, 2018, the company had requested to continue the trading halt till earlier of the market opening on November 20, 2018 or till the announcement is given to the market. However, later on, the company published another press release which had information related to the sales value. Earlier, the top management of the company stated that they are maintaining their complete focus on the profitability and they won’t be going after unprofitable sales. The company also stated that they have not given any information regarding the earnings guidance and added that the trading in the second quarter reflects the crucial contribution to the company’s profitability for the full-year.

Myer Holdings Limited stated that the sales value of Q1 FY 2019 witnessed the fall of around mid-single digit on pcp or prior corresponding period. The top management of the company stated that it has robust cash flows and the company managed to cut the net debt by $7 million when compared to the previous corresponding quarter. The company also added that it is aware with regards to the disclosure obligations and the company has also confirmed that it is complying with them.

At the time of writing, the company had an annual dividend yield of 4.44% and has the market capitalisation amounting to $369.58 million. Over the past one month, the stock has delivered the return of -8.16%.

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