Myer Holdings Ltd provides trading update: Is it a bargain?

Embattled retailer, Myer Holdings Ltd (ASX:MYR), has rallied over 8% on the back of a strong trading update and federal budget.

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Over the past year shares of embattled department store retailer, Myer Holdings Ltd (ASX: MYR), have fallen 30%.

However today the stock rallied more than 8% higher to over $1.52 per share on the back of a better-than-expected third quarter trading update and the release of the government's budget overnight.

In an announcement to the ASX, Myer said total third quarter sales were up 2.4% to $661.8 million, and were aided by the refurbishment of four stores and opening of two new stores before Christmas. On a comparable store basis, sales were up 1.7%.

Year to date sales climbed to an impressive $2,425.3 million, up 1.7% over the prior corresponding period a year earlier.

The results were better than some financial commentators were expecting and Myer noted:"Subdued trading conditions in Western Australia and Queensland were experienced during the quarter."

As reported in March, the company is currently undertaking a "thorough review of its strategy" and although it was light on detail today it said: "The strategic review is progressing well and Myer looks forward to sharing more details in due course."

Are Myer shares a bargain buy?

At today's seemingly discounted prices Myer shares trade on a forecast price-earnings ratio of just 12 and dividend yield of 6.3% – fully franked, no less!

However those investors considering a purchase of its stock must take into account the fickle nature of retailers in general and have a firm understanding of the risks facing large department stores like Myer. Personally, I prefer diversified retailers with nimble growth strategies such as Premier Investments Limited (ASX: PMV) and RCG Corporation Limited (ASX: RCG).

Motley Fool contributor Owen Raskiewicz has no position in any stocks mentioned. Owen welcomes your feedback on Google plus (see below) or you can follow him on Twitter @ASXinvest.  The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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