'The Australian' online on Thrusday 4 March 2021 summaries an analyst's buy recommendation:
Myer is one of the few retailers to not benefit from an industry-wide reduction in promotions, with gross margins declining by 55bps, driven by seasonal clearance post-Melbourne reopening and mix-shift, notes Citi.
"In addition, Myer did not see the same degree of sales transfer to online from closed stores, with online sales growth moderating to 71%. The balance sheet was the highlight however, with net cash improving by $53 million YoY to $201 million, driven by a 30% increase in free cash flow.
"We have a Buy rating and 40 cent target price. Despite less leverage to the better promotional backdrop, the balance sheet seems very well placed with a strong net cash position, well inside covenants.
"We assign a High Risk rating to Myer given i) the short-term inability to offset brick and mortar sales declines driving further operating deleverage within the business; ii) Myer’s cost reduction strategy to weigh on sales growth long term and iii) Myer’s high degree of financial leverage."'
MYR Price at posting:
29.5¢ Sentiment: Hold Disclosure: Held
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