Two problems with the takeover scenario in the near term:
-the disastrous Myer float may make a quick, high profit exit strategy a bit more difficult to pull off next time. -the board seems to be strongly backing Zahra's strategy. They may prefer to see it out unless there are signs of it failing.
IMO its the right strategy (particularly the online bit, not completely sold on the opening of new stores). But looks like the market isn't going to pay it until they start to see results. Most commentators are focusing on the short term profit dip that will be caused by investment in the new strategy, at the same time as decrying the lack of investment in the past - you can't win. IMO there will be a great turnaround story here soon, and an almighty short squeeze, but difficult to say when. I don't think Zahra is great at communicating with the analysts, could have put some numbers on the expected return on this investment, and split out the capex from the operating profit drop. Some very lazy journalists went straight for the NPAT forecast, dismissing the rest as "waffle".
Seems that my chart concerns were well founded, failure to convincingly break $2.80 on the second attempt, and the retrace a little bit too deep were the clues.
DJS Price at posting:
$2.34 Sentiment: LT Buy Disclosure: Not Held
