Myer worth 8.5% less after ASX re-list

Timing is everything as Myer Holdings Ltd's new shareholders have learned after
shares in Australia's largest iconic department store tanked 8.5 per cent after it
listed on the Australian Securities Exchange (ASX).
After raising $2 billion in Australia's biggest public float in two years, the
109-year-old department chain made its second ASX debut in 84 years having spent the
last three years in the hands of US private equity firms TPG Capital and Blum
Capital Partners LP.
TPG and Blum paid Coles Myer Ltd $1.4 billion for Myer in June 2006 and last week
exited the business at the end of a seven-month sharemarket rally.
They sold the stock for $4.10 per share to over 200,000 customers, 9500 employees
and around 80 institutions.
On Monday, Myer's new shareholders learned that the market judged their piece of
Myer to be expensive even amid a broader market sell-off.
Stag traders swooped on the stock for a quick profit after it debuted at noon at a
price of $3.88 per share - 5.4 per cent lower than its issue price.
Myer's shares finished 35 cents, or 8.54 per cent, lower at $3.75 and was the ASX's
top traded stock by turnover after over 130 million shares changed hands.
Austock Securities senior client adviser and strategist Michael Heffernan said the
company could not have picked a much worse day to list.
"They're caught up in the whirlwind of the down-draught and on a negative day you're
not going to get any premium for a new float," Mr Heffernan said.
Chief executive Bernie Brookes was philosophical about re-listing the company as
Wall Street's 2.5 per cent Friday plunge spilled over into the local sharemarket,
one day before the Reserve Bank's widely-anticipated interest rate rise.
"I think sometimes fortune favours the brave and we've been brave in moving forward
to list the business during what has been a period of turmoil," he told reporters in
Melbourne.
"So you take the good with the bad.
"We're happy we've been able to list with a really good mix of both institutions and
the general public."
Half of the shares are held by about 80 institutions, split evenly between local and
offshore institutions, and Australia's famous retailing dynasty, the Myer family,
has retained about 1.5 per cent of the stock.
Another 7.7 per cent of the shares are held by the management board, including Myer
ambassador, model Jennifer Hawkins who purchased additional shares in the float.
Ms Hawkins declined to comment further on her stake in the company.
Mr Brookes said Myer's new growth platform would drive better sales and, in turn,
demand for the shares.
"Traders will want to see how the stock reacts to what is traditionally a strong
period for retailers before closing out (Christmas)," IG Markets institutional
dealer Chris Weston said.
Myer is forecasting sales growth of three per cent in 2009/10, bringing total sales
to $3.36 billion and driving earnings before interest and tax (EBIT) up 10.7 per
cent and net profit up 10 per cent.
Myer's net profit rose from $95 million to $109 million for the 12 months to July
25, 2009, but revenue eased 1.8 per cent to $3.261 billion.
On Monday, Mr Brookes said sales during the Christmas period would be better than
last year.
"The consumer is still a bit resilient to spending but they're looking for a
bargain," he said, adding that Myer was not seeing any significant influence on
discretionary spending from interest rate rises.
"We're expecting Christmas to be about three per cent better than last Christmas."
Myer's second quarter sales to January 24, 2009, including the Christmas period,
were down 2.8 per cent to $1.081 billion following a 4.8 per cent first quarter
2008/09 sales drop.
Rival David Jones Ltd will report first quarter sales on Thursday.
Both retailers are refurbishing their flagship stores, but Myer's revamp of its
Melbourne city store into a world class retail destination is now running six months
behind schedule.
The Melbourne store is now scheduled for completion in October 2010, with the lower
floors opening in March, Mr Brookes said.