Warm weather lifts Myer

Department store records first quarterly rise in sales since 2009

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published November 15, 2012 11:47 am AEDT

Australia's largest department store, Myer Holdings Limited (ASX: MYR) has seen its first-quarter sales rise by 1%, thanks to warmer weather, and slightly improving consumer sentiment.

Revenues came in at $688 million, as a warm spring encouraged summer clothing spending, and the retailer cutback on discounts on sale items. Myer hasn't reported a quarterly increase in sales since it relisted on the ASX in October 2009, according to Bloomberg. Same store sales rose 0.8%, double the expected 0.4% expected by analysts.

In more positive news for retailers, The Australian Retailers Association (ARA) expects shoppers to spend around $41.2 billion between now and Christmas, a 3.9% gain on sales compared to the same period last year. That figure could be much higher if the Reserve Bank cuts official interest rates early next month, which could see a last minute flood of sales.

In ASX trading so far today, David Jones Limited (ASX: DJS), Premier Investments Limited (ASX: PMV) and JB Hi-Fi Limited (ASX: JBH), along with Myer were all showing positive gains in a down market.

Myer's chief executive, Bernie Brookes, said that the trading environment continued to be difficult, and the retailer remained cautious. Like David Jones, Myer has embarked on a turnaround strategy, launching two new loyalty programs, and introducing more exclusive brands, which appear to be working very well according to Mr Brookes. He also said that the company was continuing to make progress on its website, and has a strong pipeline of future enhancements.

Mr Brookes also said that the retailer was making good progress on improving customer service and on enhancing the loyalty program for 4.9 million Myer one members.

The Foolish bottom line

The current slump in consumer sentiment appears to be improving, and retailers look set to reap the lion's share of the rewards. A further rate cut in December would likely give them a massive boost.

If you only invest in one company this year, make it our "Top Stock for 2012-13". Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in David Jones and JB Hi-Fi. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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