Why the Myer (ASX:MYR) share price is at an 8-month high

The Myer share price is at an 8-month high this week after rising more than 10% yeserday. Here's the lowdown on why Myer is booming of late.

| More on:
Two fashionable asx investors dancing among confetti.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Yesterday, shares of Myer Holdings Ltd (ASX: MYR) surged 10.45% to 37 cents a share, giving the embattled but iconic Aussie retailer a market capitalisation of just over $300 million. You have to go back to early March to find the last time the Myer share price was at this level. Additionally, Myer shares are now up more than 76% since 21 October, when they were asking just 21 cents. So what's going on here?

What's driving the Myer share price?

Apart from regular appearances on the ASX's most shorted stock list (including this week), there has only been one major piece of news out of Myer recently. That was the announcement late last month that Myer's chair, Gary Hounsell, will be walking the plank.

Mr Hounsell had been under some pressure for some time. It has been well known that Solomon Lew, CEO of Premier Investments Limited (ASX: PMV), had been pushing for Mr Hounsell's resignation for a while. Mr. Lew's Premier is a large investor in Myer, owning a 10.8% stake in the company. And, as we reported at the time last month, Lew got what he came for after fellow major shareholder, Geoff Wilson of Wilson Asset Management, sided with Premier against voting for Mr. Hounsell's re-election. Mr. Lew has also called on the entire board to step down or be shown the door, and has threatened to call an extraordinary general meeting over the matter.

My-store for much longer?

According to reporting in the Australian Financial Review (AFR) yesterday, this is what was behind the massive surge in Myer shares yesterday. The AFR reports that there is building speculation that Mr. Lew, through Premier, is preparing to mount a takeover of Myer. Premier's retailing businesses like Smiggle, Peter Alexander and Just Jeans have done enormously well during the pandemic, if the company's stellar FY2020 earnings numbers are anything to go by. It seems plausible at least that Myer shareholders would be excited about the prospects of Mr. Lew running the company.

However, this might not be the whole story. The AFR also quotes Wilson Asset Management fundie, Oscar Oberg, who reckons that Myer is simply benefitting from the goodwill flowing out of the recent coronavirus vaccine announcements:

"If I look into 2022 we'd like to think a vaccine brings back some normality in the business", the AFR quotes Mr. Oberg as stating. "We think management has been doing a great job, the balance sheet is in great nick and we think they'll be able to repay their debt when it comes due next year"

It could be one, or a combination of these factors that is pushing the Myer share price to an 8-month high this week.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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 Scott Phillips.

More on Retail Shares

Two happy woman looking at a tablet.
Retail Shares

2 ASX retail shares that look like Black Friday bargain buys

These stocks look like appealing opportunities.

Read more »

A woman wearing jewellery shrugs
Retail Shares

Lovisa share price slides as sales growth fails to impress

ASX 200 investors are bidding down Lovisa shares on Friday. But why?

Read more »

Man with diving gear on in a bathtub.
Retail Shares

Own Wesfarmers shares? Here's why Bunnings is in hot water this week

Wesfarmers is getting some unwanted attention from its Bunnings operations.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Retail Shares

Up 90%, this ASX 200 retail stock's CEO just sold $500,000 worth

What could this mean?

Read more »

View of a mine site.
Retail Shares

Why buying Wesfarmers shares could provide unique lithium exposure

In the last 12 months, the stock has rallied more than 28%.

Read more »

Photo of two women shopping.
Retail Shares

Why one leading fund manager thinks this fallen ASX All Ords stock is a turnaround buy

This is a bargain stock, according to a leading fundie.

Read more »

a woman wearing fashionable clothes and jewellery checks her phone with a satisfied smile on her face in a luxurous home setting.
Retail Shares

Guess which ASX 200 stock just extended its $580 million buyback

Could this draw investor attention to the stock?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Retail Shares

Own Wesfarmers shares? Here's why Bunnings' monster profits are raising eyebrows

Bunnings is the jewel in Wesfarmers’ crown. Some people are questioning whether it should sparkle as much as it does.

Read more »