MYER should start selling Toilet Paper, page-43

Myer shares yesterday plunged 9.5 per cent after Credit Suisse downgraded the stock to underperform from outperform, citing threats from Amazon and European retail giant TK Maxx coming to Australia. “The entry of TK Maxx and Amazon, Myer’s overly large store portfolio and, in the near term, a deteriorating discretionary spending environment … is likely to be all too much for Myer, ” Credit Suisse analyst Grant Saligari said in a note to clients. “Amazon is likely to accelerate a consumer spending shift to online – customer affinity being particularly strong in home wear, clothing and beauty – all with a high overlap with Myer. ”Mr Saligari said Myer chief Richard Umbers was taking the right steps to revive the retail giant but added that this might not be enough with the prospect of Amazon and TK Maxx moving into its market and stealing its customers. Amazon could snatch 10 per cent of Myer’s clothing and non-electrical market in five years.The entry of Amazon into Australia is expected to speed up the shift of consumer spending to online.Global discount chain TK Maxx plans to convert 35 Trade Secret stores into TK Maxx shop fronts in 2017. “Myer will probably need to respond by accelerating store closure,” Mr Saligari said.“Directionally, we have no dispute with Myer’s strategy. Reduce and move to more productive trading space; improve the brand mix; grow the online channel. Myer does not have a particularly effective online model.“The risk is that the starting point might be just too difficult, with the recent acceleration in competition. “Significant thinking (and investment) in Myer’s online model is needed. Myer’s online delivery model is high cost and delivery standards are low — up to seven days for standard delivery, no express delivery option and up to five days for click and collect.”He cut Myer’s target price 43 per cent, from $1.44 to 82 cents.
https://www.businessfirstmagazine.com.au/myer-shares-crash-downgraded-credit-suisse/21286/