This is an extract from a long article by Eric Johnston to be in print in 'The Australian' on Tuesday 25 June 2024:
Margin uplift
"...Prior to the deal being floated, Myer was valued at a little over $500m, while Premier’s apparel brands that Myer is eyeing have a portfolio value of nearly $1bn, based on numbers from brokerage MST Marquee. With annual sales of more than $3bn, Myer’s turnover is three times the size of Lew’s Apparel Brands portfolio, but delivers just half the proportional earnings
In other words, Myer has to work twice as hard to deliver the same earnings outcome. And its these numbers that represent the biggest potential for Lew and Premier’s backers.
If, through the combination of the two businesses, Lew’s influence can deliver even a small uplift in profit margin through cost savings, scale and a sharper retail antenna, Myer’s revenue pool could translate to an outsized earnings lift..."
The article makes the point that in coming months, independent experts will review the proposed deal.
MYR Price at posting:
77.5¢ Sentiment: Hold Disclosure: Held
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