All those getting their jollies at the prospect of a huge Myer float windfall — and there are many, including members of the media, should take a careful look at the last two department stores TPG floated off: Debenhams in the UK and Neiman Marcus in the US. Both have been, err, disasters.
There does not appear to be too much analysis of anything going on at Myer.
Why did Bill Wavish get moved aside just months before the float announcement? Why are they rushing the float into an unstable market, at a time when they are demonstrating good profit outcomes, but NO — and I mean NO — evidence of sustainable sales growth?
Many retail insiders suspect they know the answer, but there seems to be little interest in analysis among members of the media.
The TPG boys have done a remarkable job of hacking the bejesus out of Myer, which has driven the profit growth (and conversely, impacted sales growth).
Can’t get served? More than 5000 heads have been removed from the books in five years, which has had a significant impact on costs and therefore earnings, but is one of the (many) reasons why sales are not increasing.
Out of the size you want? Few stores now carry much extra stock, which is now housed centrally in each state in a move that has had some impact on smooth stock flow through the stores.
TPG knows they are running out of creative ways to cut costs out of the business, which will impact future earnings if sales do not start to increase. Hence the rushed float. When the Myer data room opens, those with an interest here should analyse compound sales growth over the past three years (estimated to be hovering at zero when new stores and other impacts are taken into account) and comparative sales figures for the past year (which Myer do not report).
At least some in the media are starting to focus on like-for-like comparisons between Myer and DJs, which would place the value of Myer at about $1.7b, a mere $300 million more than TPG paid three years ago. It’s hard to use smoke and mirrors inside a data room.
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