Myer (ASX:MYR) Valuation in Focus After Loss, Dividend Cut, and Strategy Shift

If you’ve spent any time watching Myer Holdings (ASX:MYR) in the last week, you know things just got eventful. The department store chain announced a major statutory net loss of $211.2 million for FY25, largely due to a hefty, one-off non-cash impairment from acquiring Apparel Brands. That is a sharp reversal from last year’s profit, and management’s decision to cancel the final dividend shook more than a few portfolios. Operational headaches, especially at Myer’s national distribution centre, and the continued pinch of tough retail conditions put extra weight on an already challenging result.

Investors responded with quick recalibration as a 27% drop in share price sent Myer Holdings to its lowest levels since late 2023. This is not just about one bad year, either. Over the past year, momentum has faded as cost pressures and integration risks intensified, overshadowing the initial excitement around digital and omni-channel sales growth. The short-term damage is clear, but management has started talking up synergy targets and long-term strategic fixes to right the ship.

With Myer’s valuation sliding alongside investor confidence, the question is whether this presents a contrarian buying setup or the market is already bracing for a tougher retail environment ahead.

Price-to-Sales of 0.3x: Is it justified?

Based on current valuation, Myer Holdings is trading at a price-to-sales (P/S) ratio of just 0.3x, which is significantly below both its peer group average (1.1x) and the broader Global Multiline Retail industry average (1x). This suggests the market views Myer as undervalued in comparison to other similar companies.

The price-to-sales multiple is a fundamental valuation tool that relates a company’s market value to its revenues. For retail chains like Myer, it offers a useful way to compare performance and expectations against competitors, particularly when profitability is volatile or currently negative, as is the case here.

This low multiple implies that investors are discounting Myer’s prospects or are wary about near-term earnings visibility. However, if the company can capitalise on projected revenue growth and returns to profitability, there could be meaningful upside embedded at current share price levels.

Result: Fair Value of $0.51 (UNDERVALUED)

See our latest analysis for Myer Holdings.

However, continued inflationary pressures and unresolved distribution challenges could further weigh on Myer’s recovery outlook. These factors may diminish investor optimism despite the undervaluation.

Find out about the key risks to this Myer Holdings narrative.

Another View: Discounted Cash Flow Analysis

Switching gears, our DCF model takes a deep dive into Myer's future cash flows and supports the idea that the shares remain undervalued. However, does this method capture the retail challenges still ahead?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Myer Holdings to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Myer Holdings Narrative

If you see things differently, or want to take a hands-on approach, you can explore the numbers and shape your own view in minutes. Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Myer Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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