Myer hopes for Merry Christmas

But retailer is still cautious about the year ahead

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 21, 2013 10:12 am AEDT

Department store retailer, Myer Holdings (ASX: MYR) is expecting a good Christmas and stocktake period, but remains cautious about the year ahead.

Speaking at the company's annual general meeting (AGM), CEO Bernie Brookes said, "We quite cautious about the outlook for 2014." He added that the company was well positioned for Christmas, with the best stocks levels the company has ever had. Myer has also launched a Christmas app, which it says will help customers connect with in-store experiences they can't get elsewhere.

The company says its results for the first quarter of the 2014 financial year were pleasing, with total sales up 0.4% to $691 million, despite significant refurbishment of three of the top 20 stores. Mr Brookes says trading improved modestly during the quarter, but remains patchy. The company is anticipating a year of two different halves, with performance improving into the 2015 financial year.

Myer is spending $90 million in capital expenditure to refurbish existing stores, build new stores and further enhance its online store. After phenomenal growth in online sales, Chairman Paul McClintlock expects the online store to become profitable in 2015.

Mr Brookes also dismissed the efforts of its major landlord, Westfield Group (ASX: WDC) to setup a new online shopping mall, and said Myer would not be signing up. Mr Brookes said he saw Westfield's site as just a way to clip the ticket on Australian retail sales. He said Myer has 90,000 products on its own website, and Westfield's move would weaken earnings for retailers, and potentially push up prices for customers.

Rival David Jones (ASX: DJS) has already signed up with Westfield, as has Country Road (ASX: CTY) and Cotton On.

With consumer confidence on the improve, thanks to rising house prices and a strong stock market, it seems consumers are more willing to spend their hard-earned cash.

Foolish takeaway

Currently trading on a trailing P/E ratio of 13.0 and paying a fully franked dividend of 6.4%, Myer could be one stock to add to the watchlist.

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